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The New York Times reports that the California State Senate has approved a bill that will apply to app-based businesses and require “companies like Uber and Lyft to treat contract workers as employees … Under the measure, which would go into effect Jan. 1, workers must be designated as employees instead of contractors if a company exerts control over how they perform their tasks or if their work is part of a company’s regular business.”

According to the story, “California’s governor, Gavin Newsom, endorsed the bill this month and is expected to sign it after it goes through the State Assembly, in what is expected to be a formality.”

The bill is expected to prompt other states to follow the same direction.

Here’s how the Times describes the likely impact:

“In California, the legislation will affect at least one million workers who have been on the receiving end of a decades-long trend of outsourcing and franchising work, making employer-worker relationships more arm’s-length. Many people have been pushed into contractor status with no access to basic protections like a minimum wage and unemployment insurance. Ride-hailing drivers, food-delivery couriers, janitors, nail salon workers, construction workers and franchise owners could now all be reclassified as employees.

“But the bill’s passage, which codifies and extends a 2018 California Supreme Court ruling, threatens gig economy companies like Uber and Lyft. The ride-hailing firms — along with app-based services that offer food delivery, home repairs and dog-walking services — have built their businesses on inexpensive, independent labor. Uber and Lyft, which have hundreds of thousands of drivers in California, have said contract work provides people with flexibility. They have warned that recognizing drivers as employees could destroy their businesses.”
KC's View:
I have to admit that as someone who in virtually all of my side hustles - giving speeches, doing a bit of consulting, working in video and podcast production - is classified as a contract worker, and as someone who employs contract workers from time to time, I’m a little resistant to this. It seems to me that in some ways, it contradicts some of the things that are supposed to make contract employment so attractive.

But … I’m not an app-based business, so I probably don’t have to worry about this. And if companies like Uber had not taken advantage of their contract workers, they wouldn’t have to worry about stuff like this. They have only themselves to blame, it seems … though I’d love to see a legislative fix that would somehow split the difference, giving people necessary protections while allowing Uber and Lyft to survive (assuming they become better actors).