If you remember back a few weeks ago we covered that a new law in California was being passed. That law, known as AB5, took another huge step forward toward. The law hopes to bring Uber and Lyft drivers in the state of California into a new category of employment. Basically, California AB5 aims to change rideshare companies classification of their drivers. If the law is fully installed drivers would go from being contractors to full employees. This has far-ranging implications for rideshare drivers and “gig” economy workers at large. So what happened today?

According to KRON 4 and the San Fransisco Chronicle, hundreds of supporters and opponents descended upon the California State Capitol on Wednesday. Inside the Capitol lawmakers passed the California Assembly Bill 5 with a four to one vote.

So what is California Assembly Bill 5?

The bill’s author Assemblywoman Lorena Gonzalez, D-San Diego, states “AB5 is a new and innovative approach to address inequality and dignity in the workplace.” But what does that really mean for rideshare drivers? In short, it means that there could be some new legal protections for drivers. Remember when Uber and Lyft drivers went on strike to fight for better pay?

This is why so many drivers have rallied to the passage of the bill. The premise is that rideshare drivers are misclassified as independent contractors. This allows rideshare companies to skirt many of the major costs of a normal employee, like benefits packages. They can also pin drivers in a form of legal servitude because they are not forced to pay drivers minimum wage. When you consider the overall costs that most drivers face and factor in the recent rate cuts, many drivers are under minimum wage.

The Income Inequality Gap Continues to Grow

When news broke recently that Uber’s co-founder purchased a $72.5-million dollar home, many news outlets jumped to the defense of drivers. It is no secret that many of our fellow rideshare drivers are struggling to get by, some of us are sleeping in our cars. Lawmakers in California have taken the next step to help rideshare drivers to close that gap. That is the primary driver behind the passage of California Assembly Bill 5, known as AB5.

Why are some opposing this bill?

Opponents of the bill claim that it will hurt small businesses by forcing small businesses to overpay or provide costly benefits to their employees. However, the supporters of the bill allay those concerns by stating that this bill will only affect large institutions like Uber and Lyft.

Uber and Lyft have not given up on defeating the Bill…

Although the bill passed the California Senate Committee with a four to one vote on Wednesday, lawmakers claim that more discussion needs to occur. You can also bet that Uber and Lyft are not done putting up big money to defend their pocketbooks. If the bill passes it could be a huge blow to both companies that rely on subsidies to entice new riders and pay out new drivers. Their business model would be forced to shift in such a way that spokespeople for both companies have claimed would crush them.

What happens to the bill now that it has passed?

The bill that passed with a 53-11 vote in May was passed by the Senate Committee on Wednesday and it now heads to the Senate appropriations committee. There the bill will be further shaped and debated before it makes to the Senate Floor.

How does the bill work?

The bill functions in such a way that it will limit companies’ ability to claim that its workers are independent contractors. In more detail, it fixes the definition of an employee in the eyes of the law.

workers are employees if companies control their activities, if they do work central to the company’s business, and if the workers do not have independent enterprises doing that work.

The question then is, do rideshare drivers qualify as employees?

The answer is, Yes!

While Uber and Lyft do not “control” what rideshare drivers do, they do guide what we “can” do. Sure we can turn off the app and cancel any ride we want. However, so many of the regulations and rules of Uber and Lyft prevent us from exercising that freedom. Penalties that remove bonuses and Pro status surely qualifies more as control rather than an incentive. I don’t think anyone would challenge that the work drivers do is central to Uber or Lyft’s business. Finally, the workers can’t have independent enterprises doing the same line of work. How many rideshare drivers are running a side gig driving folks around? I’d say not many at all.

If the bill passes it could cost Uber and Lyft mightily…

According to reports both Uber and Lyft’s costs could increase massively if the bill passes for California drivers. Uber claims an increase of $500 million and Lyft up to $290 million. In response to this threat, both Uber and Lyft have approached the media stating that the current conversations are positive. They believe that these conversations give drivers a forum to “better their lot”, and suggest that reclassification under AB5 is inadvisable.

Is the gig economy and pay inequality cause a societal breakdown?

Many often think that driving for Uber or Lyft is profitable. But how much do rideshare drivers really make? When you consider the costs of having a rideshare business, what most drivers earn isn’t that much.

The quality of life for many “gig-workers” have made headlines. It is no surprise to anyone who has driven for a rideshare company that it is hard to make rent. Are you a driver that is currently struggling? We want to hear from you. What is the living situation?

Some drivers report living in small apartments with five or more people occupying spaces meant for two or three. This urban crisis is more prevalent in larger markets. These reports are yet another reason why the passage of AB5 is something that all drivers should be watching.

Some Uber drivers are speaking out about California AB5

According to the San Fransico Chronicle, driver Tim Hartway claims that the bill would take away his freedom. He claims he has acquired massive freedom by driving for Uber. He also fears that the passage of the bill could force drivers into driving even longer hours than they are now. Many like Tim, claim that classification as an employee would allow Uber and Lyft to exercise more control over their drivers. What do you think? Should more states adopt bills similar to AB5?