SACRAMENTO — Gov. Gavin Newsom on Wednesday signed sweeping labor legislation that aims to give wage and benefit protections to California rideshare drivers at companies like Uber and Lyft and to workers across other industries.
The closely watched proposal could have national implications as lawmakers, businesses and unions confront the changing nature of work and the rise of the so-called gig economy.

“California is now setting the global standard for worker protections for other states and countries to follow,” Democratic Assemblywoman Lorena Gonzalez, the author of Assembly Bill 5, said in a statement.

Higher Standard for Independent Contractors

The legislation makes it harder for companies to classify workers as independent contractors instead of employees, who are entitled to minimum wage and benefits like workers compensation.
While it affects up to a million workers, according to Gonzalez, its effect on ridesharing and meal delivery companies has seized the spotlight.
Uber, Lyft, and DoorDash are pushing Newsom to come up with a third option for gig companies and have threatened to spend $90 million on a 2020 ballot measure if they are not successful.

Newsom Wants Gig Workers to Have Collective Bargaining

Newsom, for his part, said he wants to keep negotiating with labor and business leaders to ensure that gig workers can collectively bargain.

There’s been a dispute over whether giving them employee status in California would allow them to form a union, because the National Labor Relations Board still considers gig workers to be independent contractors.
“I will convene leaders from the Legislature, the labor movement, and the business community to support innovation and a more inclusive economy by stepping in where the federal government has fallen short,” Newsom wrote in his signing statement.

Uber Says It’s Prepared to Defend Its Model

Uber general counsel Tony West has suggested Uber will not automatically start treating its drivers as employees come Jan. 1 and defend its current model if it faces legal challenges.
Uber and Lyft have offered to give employees a base hourly wage, access to benefits and a right to bargain across the industry.
“We’ve engaged in good faith with the Legislature, the Newsom administration and labor leaders for nearly a year on this issue, and we believe California is missing a real opportunity to lead the nation by improving the quality, security, and dignity of independent work,” Uber spokesman Davis White said in a statement.

Patterson Criticizes Signing

Assemblyman Jim Patterson (R-Fresno) criticized Newsom signing the bill.
“He just sentenced millions of Californians, stripping away from them, the opportunity to use their labor, to work in circumstances and situations that suit their time and their desires. It is, honestly, an attack on freedom,” Patterson said.
He also is concerned about the future of innovation.
“There is going to be somebody in a garage in California that is going to develop the next new thing,” Patterson said. “Because of what this governor is doing today, they’ll probably take it out of the state to develop it. These are the consequences of this kind of intrusive legislation.”