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  • Ari Goldfarb

California Assembly Bill

As of January 2020, California’s AB5 known as the gig worker bill will go into effect. This bill requires companies to reclassify independent contractors as employees. Its primary focus is on companies like doordash, Uber, and Lyft and will require these businesses to undergo a three-pronged:


1. The worker is free to perform services without the control or direction of the company.

2. The worker is performing work tasks that are outside the usual course of the company’s business activities.

3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.


What does this mean for the California workforce? For one it guarantees more of these gig economy workers will receive at least minimum wage for their work, along with other required employee benefits, like paid time off, health insurance, and unemployment insurance. However, with these added benefits comes to expectations for the workers.


While Uber, and Lyft have granted flexible work hours to drivers in the past, these companies now have the opportunity to increase their expectations for their workers. This could include a standard work schedule. The cost alone of paying all their drivers could end up bankrupting the ridesharing companies, or greatly decrease the accessibility of new drivers to enter the workforce.[2]


Overall thoughts, while the bill is meant to hold gig economy companies responsible for their workers, there’s a chance it will deplete the primary appeal of working for these companies in the first place.



Any opinions are those of Goldfarb Financial and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

[1] https://www.investopedia.com/california-assembly-bill-5-ab5-4773201


[2] https://www.usatoday.com/story/news/politics/2020/01/21/california-lawmaker-promises-refine-ab-5-amid-lawsuits-confusion/4505702002/

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