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Last updateTue, 18 Sep 2018 1pm

Doctors, real estate agents and hairdressers can keep their independent contractor status—but not truckers, commercial janitors, nail-salon workers, physical therapists and, significantly, gig economy workers, who will gain the rights and benefits of employees in California under sweeping workplace legislation passed this week.

Gov. Gavin Newsom has committed to signing the bill, which cleared the Assembly 56-15 in a challenge both to the longstanding trend toward outsourcing labor and to the business model of companies such as Uber, Lyft and DoorDash, who have threatened a $90 million fight at the ballot box.

Once signed, AB 5 would upend longstanding employment practices that have seeped into the Democratic presidential debate about how workers should be treated, particularly in today’s gig economy.

“With one clear test across our state labor laws, we will raise the standards for millions of workers and ensure they gain access to critical rights and benefits,” said Sen. Maria Elena Durazo, who presented the bill in the Senate on Tuesday night. “We can make California the global leader in protections for gig workers, janitors, construction workers and so many working people who can’t even pay their rent.”

Lyft spokesman Adrian Durbin said lawmakers missed an opportunity to find a flexible solution for rideshare drivers, and Uber announced it was ready to pour millions more into the ballot fight. “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,” Durbin said.

From the beginning, the bill’s author, Assemblywoman Lorena Gonzalez, a labor organizer and a Democrat from San Diego, made it clear her goal was to improve wages and workplace standards, and expand the right to collective bargaining at a time of growing income inequality.

She acknowledged more work remains but insisted the legislation is needed to establish a state standard after the California Supreme Court, in a landmark 2018 decision, created a strict test for certifying independent contractors, with the highest hurdle being that the work performed must be outside of the core of the company’s business. It’s commonly referred to as the Dynamex decision.

In advance of the vote, she shared a picture of a sentence plastered to the top of a wall in her office: “The Most Amount of Good for the Most Amount of People.”

California’s pushback against the gig economy intensifies pressure on Silicon Valley flagships such as Lyft and Uber, which were already trading below their IPO share prices amid investor concerns about the difficulty they’ve had turning a profit, despite many millions of users. Uber cut 400 people from its marketing team in July, reported a quarterly loss of $5.2 billion in August and sent layoff notices to another 400-plus workers this week.

On Wednesday, Uber chief legal officer Tony West said in a press call that the company plans to fight the tougher employment test once AB 5 takes effect next year. “We still may pass the test,” he said. “We believe we can pass the harder test.”

But concerns around basic worker protections also have become pressing in California, where one worker in three earns less than $15 an hour; also, the 18.2 percent poverty rate, when the cost of living is taken into account, is rivaled only by that of Washington, D.C. As lawmakers were debating AB 5, in fact, a commission on the future of work, appointed by Newsom, was convening not far away in Sacramento to address such issues as the proliferation of low-wage jobs, automation, artificial intelligence and the gig economy.

Aside from the philosophical questions around AB 5, the state estimates it loses about $7 billion a year in payroll taxes due to worker misclassification that could be supporting schools, roads and other public services. Supporters of the bill argue that by avoiding unemployment insurance taxes and workers’ compensation premiums, businesses shift the burden to the state—and its taxpayers—when workers get laid off, get sick or get injured on the job.

Opponents warned the bill will invite trial lawyers to file frivolous lawsuits against thousands of California businesses and called the bill a blatant power grab by big labor.

“This bill is the union caucus’ main event of the year,” said Republican Sen. Jeff Stone, who held up an exemption request form, obtained by CalMatters, that labor groups had been presenting to industry advocates seeking a carve-out.

Industries as varied as trucking and health care also pushed back, arguing that the legislation would rewrite the rules for independent workers whose status has worked for them for decades.

“AB 5 does not take into account the more than 70,000 California truckers who have built their business around the independent owner-operator model, invested hundreds of thousands of dollars in their trucks and have made the decision to run their own businesses,” said Shawn Yadon, CEO of the California Trucking Association, before the bill passed.

Hospitals, too, are worried the bill will not only cause confusion, but may have the unintended consequence of delaying patient services. Gail Blanchard-Saiger, vice president of labor and employment at the California Hospital Association, said although doctors, psychologists and podiatrists are exempt from AB 5, and hospitals employ more than 90 percent of their workforce, many medical professionals such as physical therapists and certified registered nurse anesthetists are contracted at small and rural hospitals where volume is low.

“The impact on the hospital for these health professionals is probably a delay in services, and in particular rural communities, maybe a reduction in services,” said Blanchard-Saiger.

Among the other health professionals not exempt under AB 5: occupational therapist, speech therapist, optometrist, nurse practitioner, physician assistant, radiation therapist, licensed professional clinical counselor, marriage and family therapist, licensed clinical social workers, respiratory therapists and audiology.

In the final weeks of the legislative session, gig companies unsuccessfully campaigned heavily for a new, first-in-the-nation framework that would allow their workers to remain independent while offering a wage floor and some kind of bargaining tool. And on Tuesday, Newsom told The Wall Street Journal that he is still talking to Lyft and Uber, “and regardless of what happens with AB 5, I am committed, at least, to continuing those negotiations.”

The San Francisco Chronicle reported potential legislation calling for a new category of workers—to be known as “network drivers”—to cover rideshare and delivery service drivers, guaranteeing at least 1.27 times minimum wage, reimbursement of 30 cents a mile and contributing 4 percent to a Drivers Benefits Fund to purchase workers compensation insurance and other benefits.

Uber and Lyft say the codification of the Dynamex decision—that established a three-part test for certifying contractors—will force them to fundamentally change their hiring practices. It likely means the rideshare industry will take on fewer drivers and assign shifts, giving drivers less flexibility.

Labor representatives called it a scare tactic and said nothing prevents companies from maintaining flexibility for workers.

In shifting to employee status, companies would have to offer basic worker protections such as guaranteed minimum wage, overtime pay, contributions to Social Security and Medicare, unemployment insurance and disability insurance, as well as workers’ compensation, sick leave and family leave. Workers could also get reimbursed for mileage and maintenance of their vehicles, which doesn’t happen now.

The bill triggered several rounds of protest at the Capitol with Uber and Lyft drivers circling downtown Sacramento one day, followed by truckers honking their heavy-duty trucks the next day.

Under the final version of the bill, doctors, dentists, lawyers, architects, engineers, accountants, insurance agents, real estate agents, hair stylists and barbers received exemptions. Travel agents, graphics designers and grant writers will continue to offer their professional services without disruption. Licensed cosmetologists and barbers that set their own rates and schedules won’t change. Commercial fisherman are exempt until 2023. Tow-truck drivers affiliated with the American Automobile Association got a carveout. And freelance writers and photographers can continue, provided they don’t submit more than 35 submissions to an outlet a year.

On the other end, AB 5 captured the industries targeted by labor: gig workers; big-rig, Amazon and other truck drivers; and low-wage services ranging from janitors to home health aides. Unlicensed nail technicians, language interpreters, musicians, strippers and even rabbis could be impacted.

If approved, the bill will take effect in January and gives the state attorney general and large cities the right to sue companies that don’t comply. San Francisco City Attorney Dennis Herrera and Los Angeles City Attorney Mike Feuer both say they would ensure workers are treated fairly.

“The city attorney welcomes the new authority, and if enforcement action is needed under the new law, he will exercise it,” said Feuer’s spokesman, Rob Wilcox.

During debate before the Senate vote, Republicans sought to include hostile amendments aimed at expanding exemptions for newspapers, physical therapists, the timber industry and more. Each was tabled by Democrats who control both houses of the Legislature.

Gonzalez, however, did agree to exempt the newspaper industry from converting carriers for one year.

“While I personally disagree with this delay, I’m willing to allow the newspaper industry the additional year to comply if it means those delivery drivers and nearly a million other misclassified workers are provided the minimum wage, benefits and workplace rights of Assembly Bill 5,” she said.

A few industries did get the exemption they sought, such as builders and contractors. Peter Tateishi, CEO of the Associated General Contractors of California, said his organization ended up backing the bill after being allowed to contract with other contractors under a business-to-business carve-out.

CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Politics

I feel privileged all year long, not just on Thanksgiving. Last night, hubby Dave bought a bottle of 2011 Tobin James Ballistic zinfandel, an old fave. The wine’s about $18, not terribly expensive.

For our budget.

It’s a jammy zin, without apology. As I enjoyed it, I thought back to a recent conversation with a fellow drinker about my age named Lea, 46.

Lea is homeless, or at least “in transition,” a less-permanent-sounding term. In September, Lea returned to California from Colorado, where she predicted there’d be five inches of snow by Thanksgiving Day. Lea camps out most nights. I spotted Lea sitting under a tree, drinking a 40-ounce Miller and smoking a hand-rolled cigarette. She had a worn paperback book open across her chest.

For Lea, the holidays are like any other day—although she has a slightly higher chance of getting a tasty meal. She was expecting a care package from a friend in Colorado. The package had been mailed to general delivery and had not yet arrived. She wanted to use my phone to call her friend.

I have a newish phone. I bought it because it has twice the battery life of other phones on the market. Choosing a cell phone and plan from the oodles of choices was rough. First World problems are the only kind I have.

A friend handed Lea a paper carton with what looked like mac-and-cheese. Lea drank beer with her dinner, noting that she was drinking in public.

“But I’m not breaking any glass or anything, and I'm not being loud or picking fights,” she said. Public is the only place she has to drink.

“I drink wine with my dinner most nights,” I said, in a lame attempt to connect.

“I like wine,” she replied, “but it’s too expensive.”

I thought of my embarrassing collection of wine, which lines a wall of our kitchen pantry.

This is how I justify my wine-spending habits. I don’t have a big-screen TV. My car is dented, high-mileage and paid for. Instead of paying for a gym membership, I go for daily hikes. I buy clothes at thrift shops. I pack lunches and cook in rather than dine out. That’s how I buy good wine.

Niggled by liberal guilt, I wonder how others reconcile privileged lifestyles in a world where so many starve, lack health care, lack housing, lack everything. Sometimes I think I could quit my college-prof gig and head to a developing nation to help. But I’m not the Mother Teresa type. I don’t like bugs or uncomfortable sleeping arrangements. I do like flush toilets and hot showers.

So to do my part, for now, I plan to devote some time, money and political attention to the needs of others. (You couldn’t call this noblesse oblige, because I have no noblesse. Maybe middle-class oblige?) I give a tiny bit of dough to an international agency that helps kids in Nepal obtain food, school and health care. But a person doesn’t have to look to distant nations to find poverty. Plenty of need is apparent right here at home.

I’ve been considering volunteer work in literacy education. I teach, so that makes sense. But recently I learned of a California street newspaper that could use some pro bono assistance. That’s how I ended up interviewing people in transition last week.

People I met:

• Mike, a middle-age man confused about why he wasn’t getting disability checks, who panhandled to get grocery money.

• Star, a 21-year-old who drove across the country from Pennsylvania with her husband, five other people, three dogs and no jobs lined up.

• Martha, born in California, who’d been recently assaulted in a homeless camp. No phone—so no call to the police. She had to wait until the next day to get to the emergency room. A gash on her face that needed stitches didn’t get them.

Overwhelming, right? (Who needs a drink?)

A bill has been working its way through the California Assembly that would create a Homeless Bill of Rights. AB 5 was approved by the Assembly Judiciary Committee earlier this year, but in May, the bill was put on hold, probably until early next year. The Appropriations Committee needed time to figure out how the state might pay around $300 million to build and operate an estimated 540 public-hygiene centers with showers and bathrooms—one in each city and county. That’s just one of the bill’s stipulations: the State Department of Public Health must “fund the provision of health and hygiene centers, as specified, for use by homeless persons in designated areas.”

(Follow the bill's progress here.)

The bill’s sponsor is Assemblyman Tom Ammiano, a San Francisco Democrat, who told The Sacramento Bee the bill would end laws that “infringe on poor peoples' ability to exist in public space, to acquire housing, employment and basic services and to equal protection under the laws.”

I’m no expert on solutions to help people in transition, but I think a bill like Ammiano’s is needed. That said, I’m not sure how I feel about building showers, aka treating the symptoms and not attacking the problem at its roots. It seems more logical for California to spend $300 million getting individuals into apartments with their own bathrooms and showers.

It’s an issue that I’ll be following. Turns out nothing pairs better with a trek through the California Legislature’s website better than a viscous Paso Robles zin.

If you’re looking to assuage some liberal guilt, you could write a check to Roy’s Desert Resource Center in Palm Springs. About 90 people in transition receive shelter there nightly. And showers: www.desertsos.org/RoysDesertResourceCenter.aspx.

Published in Wine