For years, Uber and Lyft drivers have been a big part of what is known as the gig economy, a collection of businesses that have sprung up due to the proliferation of phone apps that make it easy to have food and goods delivered. Uber and Lyft drivers transport paying customers from one place to another. Grubhub, DoorDash, and Postmates deliver food to your door from any restaurant you choose. The drivers who work for all of these companies have always been considered independent contractors, but more and more lawmakers and workers themselves are questioning whether independent contractor is not the right classification.
By not considering these drivers employees, Uber, Lyft, Grubhub, DoorDash, Postmates and other companies do not have to provide unemployment insurance, minimum wage, meal periods, rest breaks, health insurance, sick days and more. By avoiding the investments they would be required to make in employees, these gig economy businesses have produced millionaire or billionaire executives.
The signing of Assembly Bill 5 changes the standards California will use to classify workers as independent contractors, effective Jan. 1, 2020. The new law stipulates that a worker is an employee if the job performed is part of the company’s core business, if a supervisor instructs how the work is to be performed or if the worker is not employed in a separate trade or business. The new criteria was developed after a California Supreme Court ruling in 2018 laid out these standards.