United States: California Bill Seeks To Enable Independent Contractors In The "Gig Economy" To Organize, Bargain, And Strike

Last Updated: April 4 2016
Article by Julie A. Totten

In what could prove a harbinger of worker classification developments to come, Assembly Member Lorena Gonzalez (D – San Diego) has proposed AB 1727, "The California 1099 Self-Organizing Act." The bill, which is at the earliest stages of the legislative process, would provide an avenue for certain workers classified as independent contractors to engage in "group activities" including organizing, bargaining, and striking. At bottom, the legislation would give certain independent contractors the ability to collectively confront those with whom they contract.

The bill's broad implications were underscored by Gonzalez herself in an interview with radio station KQED in early March. The self-styled "labor leader turned legislator," explained that under the provisions of the bill, any group of 10 or more workers in any sector could organize and appoint an agent to negotiate on their behalf.

However, amendments added to the bill on March 18, appear to narrow Gonzalez's claim. In its latest form, only contractors that utilize "hosting platforms" will be covered by the bill's provisions. Gonzalez defines "hosting platforms" as "facilit(ies) for connecting people or entities seeking to hire people for work with people seeking to perform work, using any medium of facilitation." In practice, this means that the bill is aimed almost entirely at contractors in the "gig economy."

Though circumscribed by recent amendments, the potential impact of the legislation is enormous across all sectors of California's economy. Yet, reaction thus far has come primarily from firms associated with the gig economy. The Internet Association, a trade group representing large internet firms, has expressed concern about the burden associated with confronting bargaining groups of such a small size and skepticism about the legislation's legality, citing a similar development in Seattle, which triggered a suit by the US Chamber of Commerce.

In spite of California's reputation as a labor friendly state, the success of AB 1727 is not certain. A recently emboldened contingent of self-styled "moderate Democrats," led by Assm. Jim Cooper (D – Elk Grove) and Assm. Rudy Salas (D – Bakersfield), and a newly-created "Tech Caucus," led by Assm. Evan Low (D – Silicon Valley) and Assembly Majority Leader Ian Calderon (D – Whittier), could stand as significant obstacles to the adoption of Gonzalez's proposal as their loudly trumpeted business and tech friendly predilections come into conflict with traditional expectations of support for labor-backed measures. Still, Gonzalez is well positioned to advance the bill since she was recently elevated to a powerful post as the Chair of the Assembly Appropriations Committee as part of a reorganization associated with the arrival of new Assembly Speaker Anthony Rendon (D – Los Angeles).

The bill's course through its first legislative chamber, the Assembly, will see it stop first in the Labor and Employment Committee and then in the Judiciary Committee – both of which have a reputation for sympathy with labor legislation. Hearing dates in those committees have yet to be set. We will provide updates about the policy implications and political status of this legislation as they develop.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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