By Los Angeles Daily News Editorial Board
The battle over Assembly Bill 5, which forbids many companies from using contractors as their workforce, is far from over even after Gov. Gavin Newsom signed it into law. Three companies that face an existential threat from the measure — Uber, Lyft and DoorDash — have introduced an initiative that would exempt them from turning their drivers into regular employees.
Backers of the Protect App-based Drivers and Services Act will soon get the state’s OK to collect signatures to place it on the November 2020 ballot. We would have preferred a referendum to overturn this ill-conceived law in its entirety given that it will harm many industries beyond ride-sharing and delivery companies, but the initiative is a good idea nonetheless.
AB5 is the most nefarious law to come out of the recent legislative session. It codifies the California Supreme Court’s 2018 Dynamex decision, which imposed a strict “ABC Test” on California employers. For a company to use contractors as workers, their workers must a) be free from the company’s control; b) perform tasks that are outside of its main business; and c) operate a truly independent business.
The ruling undermines the business model that gig-economy companies — as well as many old-line industries such as newspapers — rely upon. Instead of fixing the problems the court created, legislators rammed through a measure that makes the ABC Test the legal standard.
The final bill was riddled with exemptions for groups including attorneys, private investigators, accountants, architects, engineers, investment advisers, dentists, physicians, insurance agents and more. It’s a mark of bad legislation when it must be amended to exclude vast swaths of the economy. Those industries with influential lobbies secured exemptions, while emerging gig businesses and others are saddled with its restrictions. The result seems arbitrary and destructive.
AB5 is not just a problem for businesses. It also threatens the livelihoods of many workers. The law “has threatened to take away the flexible work opportunities of hundreds of thousands of Californians, potentially forcing them into set shifts and mandatory hours, taking away their ability to make their own decisions,” the initiative explains. The union-backed law also threatens the emergence of new business ideas and entrepreneurial models.
The initiative would not only exempt drivers from the law’s requirements, but would provide new protections for workers. These include health-insurance stipends and a guarantee that drivers would earn 120 percent of the minimum wage. In fact, these provisions could open the door to a negotiated settlement, according to news reports. The Legislature could, say, amend AB5 in exchange for the companies withdrawing the ballot measure.
The next step is for Attorney General Xavier Becerra to provide a title and summary. Unfortunately, he has not acted in good faith in naming other measures. For instance, Becerra’s summary of an initiative that would raise commercial property taxes is so slanted that it sounds like it’s written to boost its passage. Uber, Lyft and DoorDash need to prepare for a challenge if Becerra once again uses his official position to rig the game.
It will be a long and difficult campaign, but this battle is well worth fighting. Nothing less than the state’s economic future, and the flexibility and livelihood of more than 8 percent of the state’s workers, are at stake.
*Also featured in Orange County Register, Press-Enterprise, Long Beach Press-Telegram, Torrance Daily Breeze, Pasadena Star-News, San Gabriel Valley Tribune, Whittier Daily News, San Bernardino Sun, Inland Valley Daily Bulletin, and Redlands Daily Facts.