Deliv is a Menlo Park-based crowdsourced, same-day delivery startup. Deliv bridges the last mile gap between multichannel retailers and their customers. Deliv offers same-day service to mall shoppers.

Starting this August, Deliv drivers will be employees with benefits such as coverage for workers’ compensation and unemployment, paid sick leave, access to a retirement plan and health/dental/vision coverage.

According to the report in the SF Chronicle, this is a rare move by a gig economy company to change its employment model. And it’s sure to be closely watched, as California adjusts to last year’s groundbreaking state Supreme Court ruling called Dynamex that makes it harder for companies to claim that workers are independent contractors, and considers legislation that could force other companies to change how they classify their workers.

A pending bill, AB5, would codify Dynamex, extending its reach beyond wage issues to other labor code matters and exempting some professions, such as doctors, architects and hairstylists. Lawmakers, companies and unions are now thrashing out how that would work — with many gig enterprises, such as Uber and Lyft, seeking to be exempted.

Deliv’s change, which applies only to its workers in California, “is the best approach for all our stakeholders,” said Deliv CEO Daphne Carmeli. The company declined to say how much it would cost. It is setting up a California subsidiary to hire the couriers as employees.

Deliv appears to be the first prominent California gig company to change its business model – but it won’t be the last.

Deliv, which operates in 1,400 cities in 35 metropolitan markets nationwide, works with Home Depot, Best Buy and Macy’s as well as smaller companies. Retailers pay it for deliveries and choose whether to pass some or all of that cost along to customers.

While providing benefits and withholding for Social Security and other safety net programs will cost Deliv more, Carmeli thinks that the company will receive economic advantages such as more-efficient drivers thanks to more training and management, lower recruiting costs and less turnover.

Uber and Lyft, the two biggest gig companies in AB5’s crosshairs, both said that their business models, as well as drivers’ stated preferences, rely on flexibility, which they said would be hard to achieve while also meeting requirements such as mandated meal/rest breaks and overtime. Both said they’d likely need to insist that drivers work for only one service, and limit how many drivers work at a time, two changes that would curb drivers’ earnings potential.

The ride-hailing rivals have joined forces to push for a hybrid model that would include some benefits, a guaranteed wage floor and an association to speak for drivers, who would remain independent contractors.