A new bill in the California Senate may change how people make money doing gigs. Independent contractors may be impacted by this new bill, which is currently pending approval in the state of California. The proposed law came about due to ongoing debate for companies such as Uber and Lyft who currently define their workers as independent contractors and not employees. This has led to issues regarding their treatment, as they are not included in any employee agreements or workplace protection measures.
The senate bill follows a line of thought that gig workers are not treated fairly. Current law follows an “ABC Test” to determine whether a worker is an independent contractor. This test is the result of a California Supreme Court ruling on April 30, 2018, that addressed the practices of a courier company called Dynamex. The ruling instituted this test, which presumes that a hired worker is an employee unless they can prove three factors:
Legislators in California feel this test is inadequate to protect the rights of gig workers and are taking regulations further with this new bill. AB5 is the new bill which changes the wage and benefit requirements for companies who hire independent contractors. This bill changes regulations related to unemployment insurance, wage orders and welfare. Essentially, this law will now categorize anyone who provides labor or services for pay to be considered an employee. Certain occupations will be exempt from these requirements and some will be subject to it but not until 2023. The goal of this bill is to provide reasonable pay and some assurance of protection for unemployment or welfare services for gig workers.
Companies that employee gig workers have exponentially increased in the last five years. There are several classifications of these kinds of workers, including:
A 2017 study by the Bureau of Labor Statistics reports that 3.8% of American workers (almost six million people) in the United States hold contingent or temporary jobs. Similarly, workers who are considered independent contractors or who have alternative work arrangements account for 6.9% of total employment and can include:
According to the Labor Statistics, independent or non-conventional workers are likely to be:
Temp agency or help workers are more likely to be black, Hispanic or Latino. Contract workers are more likely to be men. Median earnings per week for these workers is $685, compared to traditional job earnings, which are an average of $886 per week.
The Washington Center for Equitable Growth explains that the gig economy has wrongly victimized young or minority workers. From decreased earnings to income instability, many people who are working gigs cannot count on their money or on being well-treated. Other than high-earners, the self-employed are subject to a variety of income challenges that threaten their entrepreneurship and may force them to return to traditional jobs.
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