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SAN FRANCISCO – Uber opposed Wednesday a new California law requiring companies to reclassify their contractual employees into employees, a sign of the emerging resistance that this measure raises in the entertainment economy.
Tony West, Uber's legal advisor, said at a press conference that the company would not treat its drivers, who are independent contractors, as employees under California law. He added that drivers were not at the heart of Uber's business and that they could maintain their independence status when the measure comes into effect on January 1.
Uber's business, according to West, does not offer rides but "serves as a technological platform for many types of digital markets." He added that the company was "no stranger to legal battles".
This decision follows the formal adoption of the bill by the California legislature, called Bill 5, earlier Wednesday. The measure requires companies to treat workers as employees and not as contractors if they exercise control over the manner in which workers perform their duties or if their work is part of the usual activities of an employer. California Governor Gavin Newsom has approved the bill and is expected to sign it.
The bill has implications for application-based services such as Uber, Lyft and DoorDash, which have integrated into large companies with low-cost, self-employed workers who do not receive the benefits or minimum wage guaranteed to employees. California has at least one million people working as contractors who could be affected by the measure. In addition to truck drivers and food delivery drivers, they include nail salon workers, janitors, construction workers, and others.
Under the bill, companies must consider a three-step test when classifying a worker. This includes determining the extent to which a company is directing the worker's tasks and the extent to which the work is part of its core business.
"It's not because the test is hard that we will not be able to succeed," said West.
Historically, if a worker felt he had been misclassified as an entrepreneur, it was incumbent on him to fight the wrong classification in court. But the bill gives California cities the power to enforce the law by suing companies that do not comply.
Uber has been under pressure this year on its business. The company launched an initial public offering in May and announced significant losses and a slowdown in revenue growth. Dara Khosrowshahi, chief executive of Uber, has fired hundreds of employees in recent months to cut costs, including Tuesday.
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