Recently California’s gig economy has threatened to grind to a halt due to recent law changes on how gig economy workers are classified. Historically gig economy workers have not been considered employees of the software companies that have given them access to customers and revenue streams in exchange for their time and services.
A new law in California seeks to rewrite the rules of work and what it means to be an employee. Known informally as the gig-economy bill, or AB5, the legislation technically went into effect on Jan. 1, seeking to compel all companies ― but notably ridesharing platforms― to treat more of their workforce like employees.
This law which has been delayed from being enacted by the state courts in California, represents a seismic shift in how gig economy companies operate and generate revenue and has inspired similar efforts in New York, New Jersey and Illinois.
According to a recent Washington Post article, being an employee opens the door to protections and benefits that are not available to contractors, including minimum wage, overtime, sick and family leave, unemployment and disability insurance, and workers’ compensation. Contractors can’t formally organize with unions as employees can, either.
One progressive technology platform that has a different strategy to empowering gig economy workers and entrepreneurs is called RideConnect. We recently interviewed RideConnect’s CEO Santosh Krisnan about his perspective on this contentious issue.
According to Mr. Krishnan, “Unlike other ride sharing companies, RideConnect has never been a taxi or other type of transportation provider. Our platform has always been available to anyone who wishes to offer their services to their customers, and we have acted as a platform on which they may do so. While other ridesharing companies have claimed to be technology companies, they have been transportation providers all along and have tightly controlled the drivers and the riders who use their services. So there is no comparison between RideConnect and other ridesharing platforms. Having said that, in light of the court ruling against other ridesharing platforms, RideConnect continues to be available to drivers across the United States who wish to operate their own rideshare services using the RideConnect platform.”
“The primary approach for RideConnect is to make it easier for transportation providers to provide enterprise level services to their consumers. With upcoming features in this area, We expect service providers to benefit greatly as independent contractors and ventures when they use the RideConnect platform to offer their services to their customers.”
The gig economy debate will continue to rage on with the most recent ruling exempting many gig economy workers from AB5, including such professions as music industry workers, home inspectors, landscape architects and real estate appraisers.
We shall see over time how this law will continue to shape the debate about gig economy workers in California and globally. AB5 is expected to be contested in The US Supreme Court and beyond. For the sake of already Covid-19 impacted workers,we all hope this issue is resolved quickly and without costing additional job and productivity losses.