Northern California Record

Thursday, December 12, 2019

Gig economy expert on AB 5: Bill 'will enhance the condition of drivers who work for these companies'

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By Carrie Bradon | Sep 16, 2019


STANFORD – While business interests have denounced the recent passage of Assembly Bill 5, a measure that would seek to bring changes to the ability of businesses to designate workers as independent contractors, William Gould, a Stanford law professor and expert on the gig economy, believes that this change will bring more good than harm to the state of California and workers there.

“I think it will make some contribution to narrowing a gap that has been widening, and that is the gap between the haves and the have-nots,” Gould said.

While Gould is optimistic, ride-hailing giant Uber is opposed to the change as the bill will cost it more to employ drivers. The National Federation of Independent Business is also opposed to the bill.

“The drivers in this case will be able to have the protections of much of the state labor law in not only wage-an-hour, but unemployment comp and workers’ comp and anti-discrimination laws, (and) Social Security both at the state and federal level,” Gould said. “I think it will enhance the condition of drivers who work for these companies that have been employed on the cheap.”

Gould says that it’s a fallacy that independent contractors cannot enjoy the same protections as employees and employees cannot have the flexibility of independent contractors - both factors that AB 5 addressed.

“The exact same terms of flexibility can be made available to employees and independent contractors,” Gould said. “The matter of the ride-sharing business model may be that some of their flexibility features will be diminished as a result of business, but we’ll have to see. Some drivers will like this and some will not. In the short run, the number of drivers might diminish and for many or all of them, some form of schedule might be introduced but it doesn’t have to be. That’s a matter of economics, not a matter of law.”

Gould is not concerned over criticisms that AB5 is a job killer.

“Every time improvements are made to labor in California, it is always said that employers will leave," he said. "We have a higher minimum wage it was said that would be inhospitable to companies, so I don’t think that companies will flee California because of this Supreme Court decision."

The legislative action comes in the wake of a 2018 California Supreme Court decision holding that a worker can only be an independent contractor if three factors of a test were met. Those factors include if the worker is free from the control and direction of the hiring entity regarding performance, is performing work outside the usual course of the entity's business, and if the worker is engaged in an independently established occupation, trade or business in the same nature.

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