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1099 Self-Organizing Act: New California Labor Law Aims to Help Protect Gig Economy Workers

california-1099-self-organizing-act-labor-law.jpg

Get ready, California - there's a new proposed labor law coming to town, and it's particularly relevant to the state's growing "gig economy" whose workers have recently hit the headlines for class action lawsuits against their tech-giant employers.

The "gig" or "sharing" on-demand tech enterprises like Lyft, Uber and TaskRabbit claim to employ workers on a contract basis for short-term gigs such as driving, running errands, buying groceries, and even fixing your kitchen sink. The flexibility that the gig economy offers California employees may look glamorous on the outside, but these "independent contractors," as they are presently classified, are not considered employees under federal or state labor laws. This means they cannot legally unionize, nor are they allowed employee benefits like retirement plans, health insurance, paid time off or unemployment insurance. In fact, gig workers aren't even guaranteed a minimum wage in California, and employers do not pay the employer share of payroll taxes (social security and medicare).

Of course, employing 1099 contractors mostly benefits the employer - making operational costs lower than they would be if workers were treated as employees. Thus, companies can save a lot of money by mis-classifying workers as independent contractors rather than employees. But, these companies may soon see their operating costs increase due to a new California labor bill to be introduced in January 2016.

california-1099-self-organizing-act-labor-law.jpg

Get ready, California - there's a new proposed labor law coming to town, and it's particularly relevant to the state's growing "gig economy" whose workers have recently hit the headlines for class action lawsuits against their tech-giant employers.

The "gig" or "sharing" on-demand tech enterprises like Lyft, Uber and TaskRabbit claim to employ workers on a contract basis for short-term gigs such as driving, running errands, buying groceries, and even fixing your kitchen sink. The flexibility that the gig economy offers California employees may look glamorous on the outside, but these "independent contractors," as they are presently classified, are not considered employees under federal or state labor laws. This means they cannot legally unionize, nor are they allowed employee benefits like retirement plans, health insurance, paid time off or unemployment insurance. In fact, gig workers aren't even guaranteed a minimum wage in California, and employers do not pay the employer share of payroll taxes (social security and medicare).

Of course, employing 1099 contractors mostly benefits the employer - making operational costs lower than they would be if workers were treated as employees. Thus, companies can save a lot of money by mis-classifying workers as independent contractors rather than employees. But, these companies may soon see their operating costs increase due to a new California labor bill to be introduced in January 2016.

What is the California 1099 Self-Organizing Act?

LATimes.com reports that the proposed billaims to bypass labor unions and create a brand new organizing tool that would allow "gig" workers to form groups in order to collectively bargain with companies who are operating "gig" apps. The 1099 Self-Organizing Act was given this name because 1099 is the annual tax form that independent contractors receive from the companies paying them for their services.

Former labor leader, Assemblywoman Lorena Gonzalez (D-San Diego), is set to introduce this bill in January, when the California State Legislature reconvenes.

What the 1099 Self-Organizing Act Means for California Labor Law & "Gig" Workers

If passed, the 1099 Self-Organizing Act would apply only to California workers who depend on a "business platform," (mostly mobile apps) to acquire work from customers.

As of now, the "gig" sharing enterprises take cuts from service fees and don't pay workers' expenses, making it difficult for these workers to save for their futures. Ross says, "this is an historic time bomb that will make the unfunded [government] pension crisis look small in the next decade."

California currently has 1 million to 2 million "gig" economy workers, according to Ross, and federal labor laws currently don't protect them. And if these workers attempted to organize, they could be violating antitrust laws. However, there isn't anything preventing the state of California from creating a new organizing system itself.

"As the economy changes, the law has to change as well," Gonzalez says. "Our rules for unions come out of a different era. We have to accept that. There are pitfalls and benefits in the new economy. We need laws that promote and support it, but also protect the workers and ensure they don't slip through the cracks."

Who Supports the California 1099 Self-Organizing Act?

Recent polls show that millennials are in favor of helping "gig" workers, most likely due to the fact that many young college graduates can't find better work opportunities. Ross claims that 77% of these young people would vote in favor of a ballot measure in support of "gig" worker organizing.

Many Labor Unions would instead like for these workers to be reclassified as employees so they can join unions. And of course, businesses don't like what this bill could mean for their operating costs. And these views may prompt Gov. Jerry Brown to veto the measure even if it is passed by the Legislature.

"This is going to be tough," Gonzalez concedes. "But tough in a good way. I want to challenge people to think about this. It will require my colleagues to really stretch."

"California is the home of innovation," Ross stated. "This could be the coming thing."

Read more on LATimes.com: Organizing bill aims to provide safety net for workers in 'gig' economy

More About the California 1099 Self-Organizing Act:

  • California, Seattle may let gig workers organize, form unions via SFChronicle.com
  • Left wants 'gig economy' to play by union rules via Breitbart.com
  • Seattle Disrupts Uber and lets its drivers unionize via Times-Standard.com

Additional Information on California Labor Unions & Labor Law:

  • State of California Labor Laws
  • State of California Department of Industrial Relations: FAQ's
  • California Labor Federation

If you feel your employer is subjecting you to employment discrimination in California, know that federal and state lawscan help protect your employee rights.Contact our California employment lawyers at Hennig Ruiz for your free consultation today.

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