The biggest change in the American labor market this decade came quietly from California on Tuesday, as the state legislature passed a bill requiring companies to treat workers as employees, not as independent contractors, in most regular jobs. The prospective law would reform the business models of Lyft, Uber, DoorDash, and other giants of the so-called gig economy—companies that routinely treat field employees as contractors. As legislation, it proposes to change what is often termed, with yellow floats of optimism attached, “the future of work.” For some years now, we have been told that working when you want, in pursuits you love, piecing together a salary outside the constraints of the time clock and the gray flannel suit, was a bright, creative life awaiting those who desired it. The new bill, which, if signed, would go into effect next year, concedes that this progressive vision has been a mirage.
It’s a major shift. In 2017, in a long piece for this magazine, I took a close look at the gig economy and its entanglement with Democratic politics. I discovered that companies such as Lyft and Airbnb not only shared a conceptual lineage in West Coast lefty culture—they were staffed inordinately with former Democratic operatives, who saw themselves as “democratizing” capital and offering employment freedom to the middle class. Yet something didn’t quite compute, because, by most measures, independent contractors within the gig economy struggled a lot. Yes, they could work whenever they wished, but most were unable to set their wages or assume the basic safeguards of employment. The enrichment they’d been promised rarely appeared, and, when it did, it tended to flow upward, to people who had the most opportunity from the start. What was presented as an opportunity for worker empowerment and self-determined pluralism was, in practice, more like carte blanche for exploitation—a new, less-regulated way of offloading risk and responsibility from companies and onto the workers in their yokes.
The new law, California Assembly Bill 5, is based on the notion that people who look like old-school employees are old-school employees and ought to be treated as such. (Employees, who receive W-2 tax forms, receive company benefits and a host of legal protections that independent contractors, who receive 1099-MISC forms, do not.) The progress of the bill through California’s legislature shows the blue establishment stepping away from the “democratizing” promises of techie disruption—ideas that have underlain much of this decade’s growth—and reëxamining the facts. Gavin Newsom, California’s governor, whose signature the bill awaits, endorsed the measure earlier this month, describing it, in a Labor Day editorial published in the Sacramento Bee, as extending “critical labor protections to more workers by curbing misclassification.” It was a turn from a leader, who, just five years ago, published a book titled “Citizenville: How to Take the Town Square Digital and Reinvent Government,” and challenged regulatory obstacles to a world of app-ified ease. Newsom’s evolution may prove a bellwether: a step back from the vague, revolutionary idea of building a new system and an embrace of a reformer’s efforts to extend protections that exist.
That change would be progress, and the details of the bill bear out why. It draws on a ruling last year, Dynamex Operations West v. Superior Court of Los Angeles, that narrowed the definition of independent contracting so that it depends on just three criteria (previous definitions had involved as many as eleven). The three-point test is simple enough that workers can apply it to themselves. An independent contractor, it says, must be free from a company’s control and direction. The work he or she does can’t be the company’s main business. And the contractor must be performing work that he or she does in an independently established trade. If even one of those statements is untrue, a worker must be classified as an employee, and is entitled to the benefits and protections that that status entails.
Companies with a lot of independent contractors on their books have bridled, in some cases preposterously. Uber’s chief legal officer has insisted that driving is “outside the usual course” of Uber’s business—news, surely, to the tens of millions of people who open the Uber app solely for the purpose of being driven somewhere. The Los Angeles Times, in an editorial published earlier this month, lamented the prospect of classifying paper-delivery people as employees, suggesting that it might destroy the institution of California journalism. Of course the bill, if signed, would entail business costs—how could it not? The point is that a business whose survival depends on misclassifying and under-supporting workers isn’t a real, functional business at all.
Correcting that perversion in the labor market is as strong a step as any toward reëmpowering the middle class. Companies that would be affected by Assembly Bill 5 have begun to emphasize how uncool life as a regular old employee would be: under the new law, both Lyft and Uber have noted, they might have to institute shifts—like, you know, the nine-to-five kind. Just imagine having to show up for work. It’s a bummer, to be sure. But now imagine having benefits, protections, and a future for the job that you do eight hours a day. Imagine being able to know your income ahead of time and plan for a financial future. True, you may not be able to decide when to eat lunch, but beyond the hour-to-hour frame, new freedoms will abound.
Or, possibly, they are old freedoms renewed. The promise of the gig economy was about unplugging from the Matrix. Come out from your grim cubicle job, it urged. Go beyond your two weeks of vacation; shatter the system; shirk the Man; do a new, freer kind of work! As far as employment law is concerned, the California bill marks the end of this rumspringa. For a lot of workers, though, it allows a return to choice and strength. We’re told now, as a matter of course, that the system is the enemy and the political establishment is weak. But that doctrine was co-opted years ago, if it was ever true. Unplugging, it turned out, was just what the Man wanted. Workers, welcome home.
This content was originally published here.