California Approves Bill to Reshape Gigging Economy

California legislators have approved a landmark bill that requires companies like Uber and Lyft to treat contract workers as employees, a move that could reshape the gig economy, including gigging musicians, and that adds fuel to a yearslong debate over whether the nature of work has become too insecure.

The bill passed in a 29-to-11 vote in the State Senate and will apply to app-based companies, despite their efforts to negotiate an exemption. California’s governor, Gavin Newsom, endorsed the bill this month and is expected to sign it.

Under the measure, which would go into effect Jan. 1, workers must be designated as employees instead of contractors if a company exerts control over how they perform their tasks or if their work is part of a company’s regular business.

That includes those working in the state’s music industry in which executives have warned the law would specifically crush the independent sector. Under the new law, producers, engineers, publicists, managers, dancers, background vocalists and others hired by artists could be defined as employees and subject to stringent employment regulations. 

“Unless there is an exemption for the music industry, it will make every studio engineer, employees for whoever is hiring them,” American Association of Independent Music (A2IM) president and CEO Richard J. Burgess said earlier this month.

Artist unions and the recording industry have been concerned about how the bill would impact the work of musicians, with groups preferring no amendment representing musician interestes in AB5 at all.

Burgess said industry groups had been “running into a brick wall” trying to get an exemption included, saying the now-previous system had been working fine and the law passing would “gut the music industry.” 

The bill may also influence other U.S. states. A coalition of labor groups is pushing similar legislation in New York, and bills in Washington State and Oregon that were similar to California’s but failed to advance could see renewed momentum. New York City passed a minimum wage for ride-hailing drivers last year but did not try to classify them as employees.

In California, the legislation will affect at least one million workers who have been on the receiving end of a decades-long trend of outsourcing and franchising work, making employer-worker relationships more arm’s-length. Many people have been pushed into contractor status with no access to basic protections like a minimum wage and unemployment insurance.

Source: Wall Street Journal