In the war over legislating the gig economy, a bill introduced by California Senator Cathleen Galgiani last February in the Legislature – SB 1039 – known as “The Independent Worker Rights Act of 2020,” could pave the way for creating a third class of worker.

On January 1, 2020, Assembly Bill 5 went into effect, codifying the decision of the California Supreme Court in Dynamex Operations W. v. Superior Court (2018) 4 Cal.5th 903 (Dynamex) applying the “ABC” test to classify workers as independent contractors or employees.

In enacting AB 5, the Legislature intended to rectify harm to misclassified workers who lose workplace benefits and protections when misclassified, including the guarantee of minimum wage, workers’ compensation, disability insurance and protection from discrimination.

Senator Galgiani wrote that the enactment of AB 5 has led to a reclassification of independent workers as employees, resulting in the loss of opportunities for these workers due to the cessation of businesses operating in California. This has resulted in fewer opportunities for independent workers desiring flexible working conditions in the current economy.

In fact, according to the Federal Reserve, there are currently more than 57,000,000 workers in the gig economy, with 85 percent of those workers pursuing work in the gig economy to supplement income or as a hobby or “just for fun,” and only 16 percent pursuing work in the gig economy as their primary source of income.

She went on to write that as a result, it has become increasingly obvious that a binary system for classifying workers as either independent contractors or employees is outdated and inapposite of the current reality of the labor market and work opportunities presented in the gig economy and the desire of workers seeking flexible working conditions.

Currently, the Governor’s Future of Work Commission is examining the impact of technology on work, workers, employers, jobs, and society to develop a new social compact for California workers.

With executive action towards modernizing worker safety net protections, it is the intent of the proposed law to enhance the efficiency of the labor market by extending many of the legal benefits and protections found in employment relationships to independent workers.

The the purpose of the proposed law is to develop a modern policy framework that facilitates independent work for those who voluntarily choose it by creating a third classification of workers in order to offer basic rights and protections they deserve under the law relative to the work opportunities and circumstances of the work, including a minimum wage, occupational accident coverage if they are injured on the job, protection from discrimination, and paid medical leave where required by law.

A third class of worker could mean big changes for workers’ compensation. This bill is definitely one to watch.