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Calif. Law That Focuses On Gig-Economy Workers Creates Controversy


Some Californians are upset about a new law that's set to take effect in the next few days. It's Assembly Bill 5, and it sets higher standards for who can be considered an independent contractor. It's mostly centered on gig economy workers like ride share and food delivery drivers. But employers and employees in other industries say it's not clear how this new law is going to affect them. Joining us from California is John Myers. He's the Los Angeles Times Sacramento bureau chief. Good morning, John.

JOHN MYERS: Good morning.

KING: What was this law - this new law intended to do?

MYERS: Well, I think it's important to first point out that it really started with a lawsuit, Noel. It was a ruling by the California Supreme Court 18 months ago, simply put, that businesses in the state had to apply a new strict test to determine when a worker is an independent contractor or had to be considered an employee. So this law that the California legislature wrote set out to align California's existing laws with that court ruling. And it's a big issue. Obviously, it matters to the way people do their work. It has a very other big issue, which there are estimates that the misclassification of workers has kept some $7 billion in state payroll taxes from being collected. So it's really gotten everyone's attention.

KING: Explain to me why people are so worried about it. What is the specific thing that they're concerned about?

MYERS: I think, you know, the debate really has been so large because it's bigger than one business or another. It's really a debate about the nature of work in the 21st century. And so, you know, we saw scores of industries lobbying California lawmakers this year to exempt their particular endeavors from these new classifications of having to be a worker. We saw truckers, musicians, travel agents and others say, look, you know, we're independent contractors; we like it that way. Some of them were given exemptions in the law, Assembly Bill 5; some were not. And as you said, the gig economy, Uber and Lyft, they have been insistent that they, too, should be exempted. They have not been exempted. And we're going to see this battle continue again in the new year in a couple of places in California, both in the state Capitol and potentially on a statewide ballot measure.

KING: What is the benefit of being an independent contractor versus an employee?

MYERS: Well, certainly, I mean, the folks who came to lobby about this said it was a flexibility issue. It was a side job, a second job. But, again, when you look at health benefits or paid sick leave or all these other kinds of things that come with the designation of an employee, the supporters of AB5 said people are being taken advantage of. And, again, I think it's this nature of work that is changing that has made this debate so large.

KING: So how are politicians in California responding?

MYERS: Well, I think there's going to be a lot more discussion about who is in and who is out of the independent contractor model. And as I alluded to a moment ago, we're going to have a statewide ballot measure it looks like. Uber and Lyft have put a hundred million dollars with their allies into a campaign account to go to the voters in California and ask specifically to be exempted from AB5. I think we're going to hear a lot about that. The presidential candidates have weighed in. It's going to be pretty contentious, I think, all the way through the year.

KING: There are, we should note, also some lawsuits pending against this new law. Could it just be overturned in the end?

MYERS: I think it's always possible, but I think that you're going to see elected officials weigh in specifically probably before that to continue to tweak the law. But, again, there are so many different classifications of workers and businesses who have come forward and said, what about me? What about me? I think it's going to be interesting to see whether there's anything sweeping or whether this will be an individual effort. But, you know, again it has really been a fascinating battle to watch. And I don't think it's going to be over anytime soon.

KING: John Myers, Sacramento bureau chief for the LA Times. John, thanks so much.

MYERS: You're welcome.

(SOUNDBITE OF ERIC LAU'S "RISE UP (INSTRUMENTAL)") Transcript provided by NPR, Copyright NPR.