California Governor Gavin Newson signed legislation Thursday aimed at protecting so-called “gig economy” employees.
Assembly Bill No. 5 is expected to impact drivers for ride share apps such as Uber and Lyft. However, the legislation also can affect other independent employees. The legislation has amended Section 621 of the Unemployment Insurance Code to define an Employee as “Any member of a limited liability company that is treated as a corporation for federal income tax purposes.”
The legislation will make it difficult for companies to classify workers as independent contractors instead of employees in order to avoid supplying them with employment benefits, such as workers compensation. This legislation is a direct response to the changing employment atmosphere within the country, as seemingly independent workers are becoming more frequently employed under apps and online services.