In January, a new California law called AB5 went into effect, requiring companies to reclassify some gig economy workers as employees instead of independent contractors. Cue: courtroom drama.
Uber and Lyft said ‘this shouldn’t apply to us.’ California sued. Now the companies have until August 25 to agree to some big changes. Or potentially hit the brakes on operations in the state. TBD what happens next. But here’s how AB5 – and similar gig-worker proposals other states have considered – could affect your wallet.
Prices could go up. Employees have different rights than contractors. Like a guaranteed minimum wage and unemployment insurance. Paying for that could hit companies hard, especially in a pandemic when business has slowed. Making it likely that companies will consider passing on those costs. Uber estimated its prices could more than double for riders in some areas.
And the service could get worse. Critics argue that AB5 makes gig jobs less attractive to workers who like the flexibility that comes with making their own schedules. Companies could also choose to slim down their workforces as a way to cut costs. Meaning it could take longer than usual to get where you want to go when the closest driver’s miles away.
Your side hustle could be more lucrative. Qualifying for more employment rights (which may also include overtime and sick pay) could mean more money in your bank account. Something a lot of Americans could use now.
theSkimm: Until recently, the gig economy has been the Wild Wild West. But AB5 and any future laws like it could change the way some companies — and people who work for them — make money. The rest of us are along for the ride.
Skimm'd by: Ivana Pino, Elizabeth Smith, and Elyse Steinhaus