Newsom Signs Controversial Bill Targeting Gig Companies Like Uber, Lyft

California Gov. Gavin Newsom on Wednesday signed sweeping labor legislation that aims to give wage and benefit protections to ride-hail drivers at companies like Uber and Lyft, as well as 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 gig economy. The so-called Dynamex bill, AB 5, essentially codifies a 2018 California Supreme Court decision that found workers who perform a core service of a company must be classified as employees — not contractors.

The legislation affects up to 1 million workers, making them entitled to minimum wage and benefits like workers' compensation, said San Diego Democratic Assemblywoman Lorena Gonzalez, who authored the bill.

But its effect on ride-hailing and meal delivery companies has seized the spotlight. Gonzalez said the companies have put themselves in a tough spot.

"They have created so many millionaires and billionaires in this state and that's great. That's innovative," she said. "But when you do it on the backs of the working poor, there's something wrong there."

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.

Uber general counsel Tony West has suggested the company will not automatically start treating its drivers as employees come Jan. 1, when the law goes into effect, saying they aren't a core part of its business model.

"I think he's full of shit and I think most people kind of saw that," Gonzalez said of West's suggestion. "I mean that was incredulous, I think, for most of us."

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.

Newsom, for his part, said Wednesday that he wants to keep negotiating with labor and business leaders to ensure that gig workers can collectively bargain since there's been a dispute over whether giving them employee status in California would allow them to form a union. 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.

KQED News' Katie Orr contributed to this report.