California regulator rules that drivers for ride-hailing services are employees 


The ruling will see drivers for services like Uber will now qualify for employee benefits.

The San Francisco Chronicle has reported on a new ruling by the California Public Utilities Commission (CPUC) in the U.S that drivers of e-hailing services (referred to as ‘Transportation Network Companies’, or ‘TNCs’) like Uber are to be considered as employees. The state government body responsible for licensing and regulating some transportation officially ruled Tuesday that the decision was a newly-enacted state law known as AB5, which determines parameters from defining workers contractors or employees who have various legal rights and protections, including better pay, benefits and the ability to unionise. 

The law has made it more difficult for companies to classify employees as independent contractors and that, along with the recent CPUC ruling, is bound to have a significant impact on the gig economy in California. 

Reads the ruling: ”For now, TNC drivers are presumed to be employees and the Commission must ensure that TNCs comply with those requirements that are applicable to the employees of an entity subject to the Commission's jurisdiction.”

Prior to AB5, contractors, freelancers and drivers of ride-hailing services in the U.S have not been able to receive benefits that their full-time counterparts receive like healthcare and paid leave. Companies using the services of these contract workers have therefore not been required to abide by certain labour regulations, such as minimum wage, or payroll taxes for those workers, which feed into programs like unemployment insurance.

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