The Democrat-led California legislature passed legislation on Wednesday that would require gig economy companies such as Uber and Lyft to stop classifying their workers as contractors rather than employees, a landmark bill that could set a precedent for an overhaul of ridesharing across the country.
The state assembly passed voted 56-15 to approve it Wednesday, the day after senators approved it 29-11. The bill now heads to the desk of Gov. Gavin Newsom, a Democrat who has vowed to sign it.
The passage was a major blow to companies relying on using contractors as part of their economic model. The measure has been championed by liberal Democratic presidential candidates Sens. Elizabeth Warren of Massachusetts, Bernie Sanders of Vermont, and Kamala Harris of California.
“Today we are determining the future of the California economy,” said Los Angeles State Sen. Maria Elena Durazo, a Democrat. “We can either choose to become complicit in the exploitation of hard-working Californians or we choose to rebuild the working and middle class, protect taxpayers, and help responsible businesses thrive in the state.”
The legislation was staunchly opposed by the gig economy companies who argued it would limit their ability to hire drivers and undermine the flexibility those drivers enjoyed. “We are fully prepared to take this issue to the voters of California to preserve the freedom and access drivers and riders want and need,” Lyft said in a statement.
Most gig economy companies use the contract model, which treats workers like independent companies and therefore puts them outside of most benefits and protections required for employees under federal law, such as minimum wage and overtime. The legislation would end that and also make taxing and regulating the companies and their employees easier.
Reaction to the passage was mixed on the internet forum Uberpeople.net, where drivers anonymously share stories and tips. Some drivers argue that the companies have been squeezing the drivers too much. “Those benefits will be on top of making AT LEAST minimum wage which they will now need to honor. Furthermore, all other employment laws now come into affect thus Uber and Lyft can no longer operate as lawless companies exploiting millions of workers,” said one poster.
Others feared the increased regulation would come at the expense of drivers without ultimately increasing the money they make. “The new Uber, You will work 12pm to 9 am, 2 15 minute breaks, 1 hour lunch from 3am to 4 am. Accept ALL requests no matter the distance or you’re fired,” said another poster. “Hope you like the new taxes that will be taken out of your paycheck each week, plus insurance.”