Regulations

California Passes Landmark Law To Regulate TNCs

News Reports
Posted on September 11, 2019
California is hopefully setting a precedent for other states. (Photo via Flickr.com user www.quotecatalog.com)

California is hopefully setting a precedent for other states. (Photo via Flickr.com user www.quotecatalog.com)

[Editor's Note: Updated with Mark Stewart's comments on 9/11/2019 at 11:15am PST]

California just disrupted the gig economy.

Senate lawmakers passed a controversial bill, known as AB 5, on the evening of Aug. 10, after months of uproar from businesses and gig companies like Uber and Lyft. The bill will require businesses to hire workers as employees, not independent contractors, with some exceptions. That will give hundreds of thousands of California workers basic labor rights for the first time.

And despite an aggressive lobbying campaign, Uber and Lyft are not exempt.

Vox article here

Mark Stewart, a GCLA board director who leads the group’s legislative and regulatory affairs, spoke to LCT Magazine and explained while the bill passing is a win, it’s still a work in progress.

Part of the challenge going forward will be enforcement. Once signed by Calif. Gov. Newsom, the bill would become law on January 1, 2020. Stewart met with representative Lorena Gonzalez in San Diego in August, and she said San Francisco and San Diego are interested in enforcing the law.  

An amendment on enforcement attached to the bill states, “an action for injunctive relief to prevent the continued misclassification of employees as independent contractors may be prosecuted against the putative employer in a court of competent jurisdiction by the Attorney General or city attorney of a city having a population in excess of 750,000...” Since Uber and Lyft are headquartered in San Francisco, this would spell trouble for them.

An amendment TNCs wanted added to the bill asked for an extension of the enforcement of the law for one year, adoption of federal standards, and to delay implementation of that for two years. That amendment was killed on Sept. 10. “They realize with that amendment being thrown in there effective on January 1, they only have three months. I think they're in a panic. That's why they tried to throw all this in at the last minute. It’s like a temporary stay while we get the ballot initiative going.”

While Governor Newsom is most likely going to sign off on the bill, the battle isn’t over yet. It still must go back to the assembly for the amendments to be approved.

The GCLA will be going to the PUC the day after their September 17 fall meeting to meet with the new executive director to talk about some strategy points as well as this bill.

“I think we're being very proactive along with this bill from the very beginning, being able to have conversations with the actual author. Because let's face it — of all the different industries opposing this, the largest is rideshare.”

To read the full bill with proposed amendments, click here.

UPDATE (9/11/2019, 11:39am): AB5 has passed the assembly on a 56-15 vote. The bill is being transmitted immediately to Gov. Newsom, and could be signed as early as Sept.11.

Related Topics: California operators, employee vs independent contractor, GCLA, Greater California Livery Association, independent contractor issues, legislation, Lyft, state regulations, TNCs, Uber

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Comments ( 4 )
  • Jon Mignacca

     | about 4 days ago

    The gig companies complain that they have to pass on costs to consumers. The fact of the matter is that their current low fees are at the expense of their employees and unbelievably consumers as well. Doesn’t make sense, well gig companies hide behind this “internet “ farce and consumers using Uber and Lyft may not realize the other areas these gig companies are cheating. Skirting regulations, insurance, adequate background checks and on and on!!!! Professional Limousine and car services, taxis and other public carriers charger more because they comply with regulations etc. This legislation LEVELS the playing field and provides fair treatment to gig employees.

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