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In a bicameral legislature, it is not unusual to see bills that receive substantial support in their house of
introduction confront a bumpier road in the second house. AB 5 (Gonzalez), the bill dealing with the issue of
employee/independent contractor as a result of the Dynamex ruling, may be starting to experience a little
slippage in traction. Even if some version of the proposed public policy change makes it through the
Legislature, the Governor has the last word.

In a recent interview with the San Francisco Chronicle, Governor Gavin Newsom was asked about AB 5 for it
places him squarely between two of his favorite constituencies, organized labor and high-tech disrupters. The
Governor opined he hopes a compromise can be reached between the two factions. In fact, during the
interview, the Governor indicated Uber/Lyft and labor interests were negotiating toward this end literally at
the same time. It has been reported in various press articles Uber/Lyft have been offering employee-like
benefits to its drivers to develop a compromise with organized labor that would provide them an exemption
from AB 5.

Up to this point, the author of AB 5, Assemblymember Lorena Gonzalez of San Diego, has indicated she would
not include gig workers in her legislation. Also, in the interview, the Governor indicated there is a need to
develop a system wherein all workers would be eligible for employee-like benefits supported by employers
who rely on the gig economy. He indicated he was worried about the classification of workers as independent
contractors, as they do not have access to traditional benefits, and he further stated if things continue as they
are, much of the California workforce could be temporary workers, a system which is not sustainable without
access to benefits. He closed by saying the status quo is untenable, and he was pushing for a good
compromise.

Back in the Legislature, AB 5 is most likely to be set for hearing in the Senate Labor, Public Employment and
Retirement Committee on Wednesday, July 10. Discussions between labor and the Chamber of Commerce, the
trucking industry and other interested parties continue as details for possible amendments are worked out and
will likely be addressed in the Senate Labor Committee hearing. These potential amendments include a
business-to-business exemption in the construction industry, including swimming pools and spas.
Amendments may also include language that preserves existing exemptions, texts, and presumptions
regarding employment status for unemployment insurance, wage orders and potential exemptions for various
professions (grant writers, freelance writers/photographers, broaden the personal care exemption).
A July 12 legislative deadline for policy committees of the Legislature to hear all second house bills will shed
some additional light on the status of various negotiations relative to this legislation. Further, as we enter the
Legislature’s summer recess, it is presumed negotiations on AB 5 will continue and further amendments to the
bill will be forthcoming when the bill is heard in the Senate Appropriations Committee toward the end of
August. 

We will keep you updated as more information is available.

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