The “gig economy” is on shaky ground in its own home state of California.
Legislators there passed a landmark law on Wednesday that could force Uber, Lyft and other “gig economy” companies to classify their workers as employees rather than contractors.
The law, which is being vehemently opposed by big tech companies, would affect more than 1 million “gig” workers in the state, and require the companies to give sick days to its drivers and pay them a minimum wage and workers’ compensation.
The bill passed both state legislative houses this week, and will be sent to the desk of Gov. Gavin Newsom, who said he would sign it.
Shares of the companies rose Wednesday, however, after Newsom told The Wall Street Journal he would continue to negotiate with companies affected by the measure, known as Assembly Bill 5.
Uber’s Chief Legal Officer, Tony West, said the ride-sharing giant won’t automatically reclassify the contractors as employees when the law goes into effect in January because drivers aren’t part of its core business.
“In fact, several previous rulings have found that drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces,” West said in a blog post.
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Lyft and Uber — as well as other “gig” outfits like DoorDash, Postmates, and Instacart — are pushing to bring the state law to the ballot box next year in an effort to have it repealed or changed.