The California Public Utilities Commission on Wednesday ruled that AB5—the state law that classifies gig workers as employees rather than contractors—applies to ride-sharing services.
It wasn’t a big surprise. AB5 (Assembly Bill 5) was specifically targeted at Uber Technologies (ticker: UBER), Lyft (LYFT), and other services that sign on temporary workers. The bill was signed into law by Gov. Gavin Newsom in September and officially went into effect Jan. 1.
Uber and Lyft have resisted implementing the law, which would almost certainly raise their labor costs. The companies have said it would result in a smaller number of drivers with reduced flexibility to set their hours. In May, the California attorney general, along with the city attorneys for Los Angeles, San Diego, and San Francisco, sued Uber and Lyft seeking to force them to comply.
There are other legal cases at play: As the commission noted in its ruling yesterday…
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