(Kevin N. Hume/S.F. Examiner)

(Kevin N. Hume/S.F. Examiner)

Newsom’s CA budget includes $20 million for AB 5 enforcement

Funding will support investigations of labor law violations, increase in workers’ compensation claims

Governor Gavin Newsom is preparing California government to enforce a controversial new employment law focused on contractors statewide including Uber and Lyft drivers.

Roughly $20 million in additional funding in Newsom’s proposed 2020 budget will go to enforcing Assembly Bill 5, the governor announced Friday.

AB5, authored by Assemblymember Lorena Gonzalez (D- San Diego), cements the Dynamex court decision, creating a stricter standard for employers to demonstrate their workers are contractors, instead of employees. The bill was primarily aimed at forcing Uber and Lyft to hire their tens of thousands of California drivers as employees, rather than independent contractors as the companies claim.

Newsom’s budget includes $17.5 million for the Department of Industrial Relations to “address workload” associated with more workers using workers’ compensation, and “investigations of labor law violations” related to worker status, wage claim filings and workplace health and safety inspections, according to Newsom’s budget.

It also includes $3.4 million for the Employment Development Department to train staff and administer the ABC Employment Test as mandated under AB5, and to conduct hearings and investigations on workers’ status. The Department of Justice will also net $780,000 to address increased enforcement actions expected under AB5.

Newsom told reporters that AB5 “was state law” before AB5 was a legislative effort and “my job as (an) executive is to enforce the law,” according to Politico.

While AB5 was hotly debated in terms of its effect on Uber and Lyft drivers, it has caught a number of other industries in its crosshairs, including journalism. Freelancers have said they are being denied work under the law, which imposes new limits on the number of stories they can write for an outlet annually without being considered an employee, and have filed a lawsuit alleging it violates the First Amendment.

Truckers have also challenged the law, and a Los Angeles County Superior Court Judge on Thursday ruled that AB5 does not apply to them because it is preempted by federal law.

Uber, Lyft and other gig-economy companies are pushing back on AB5 as well, suing the state to block it and working on a state ballot initiative to knock out AB5.

That hasn’t stopped Uber from changing how it treats drivers in light of AB5, however.

This week, Uber changed how its app works for riders and passengers in light of AB5.

Passengers now see a range of prices in their app, instead of a specific price for a ride, and drivers will be able to more easily see how much money they could potentially make on a trip, which they could not previously, according to the Los Angeles Times.

Uber also will no longer punish its drivers for rejecting trips they don’t want to make, a critique of those who said Uber imposed too many rules on its drivers for them to be independent contractors.


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