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California law predicted to impact on the wider gig economy

12 September 2019

Industry experts are continuing to assess Assembly Bill 5 (AB5) passed by the Senate of the US state of California this week.

Its main purpose is to see workers in the gig economy classed as company employees, allowing them to receive the same benefits as staff in other businesses.

AB5 also allows Californian cities to sue companies who are not seen to comply with the law, changing from the current position that requires individual workers to take legal action.

There has been considerable attention placed on the emergence of companies that offer workers 'gigs' where they are paid for the work completed, often with no holiday, sick pay or other benefits.

The passing of AB5 in California, which comes into force on 1 January 2020, is therefore expected to be the first of numerous additional instances of new legislation in many areas of the world.

Unless workers can be legally classed as contractors, they will have to be treated as employees, the new legislation says.

According to the BBC, companies such as Uber and Lyft are likely to have to introduce more traditional shift patterns and other working practices to comply with the law, which will have a significant impact on their business.

Discussions are continuing to assess how new laws such as AB5 would impact the FM industry in the UK.

Although the gig economy has received largely negative coverage by the national and international media, it has been welcomed by some workers, particularly those not seeking full-time employment.

While this group of workers has appreciated the flexibility and freedom to choose when they do or do not work, others have expressed frustration that they are not able to find enough work and therefore struggle to make ends meet.

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