April 9, 2018

Assemblyman Tony Thurmond

Chair, Assembly Labor and Employment Committee
1020 N Street, Room 155
Sacramento, CA 95814

RE: AB 2765 (Low) – OPPOSE

Dear Assemblyman Thurmond:

The undersigned unions write in opposition to AB 2765 (Low), which would strip employment status
from tens of thousands of California workers.

AB 2765 would establish a new category of worker called a “marketplace contractor” and defined as
“any person who enters into an agreement with a digital marketplace to use the marketplace’s digital
Internet Web site or digital application in connection with the provision of services to individuals or
entities seeking these services.” It would also establish a new type of employer called a “digital
marketplace” and defined as a company that operates only through a smart phone application or
website. A “marketplace” would have the option of contributing to a benefit plan on behalf of the
“marketplace contractor,” but such contribution would be voluntary. Finally, this bill would overrule
existing law as to who is an employee by stating that a marketplace contractor “shall be treated as an
independent contractor of the digital marketplace.”
 
This bill seeks to sever the employment relationship for an entire industry. As apps have enabled
companies to hire and assign workers without ever meeting them or interacting face to face, some have
argued that the mere use of this technology changes the fundamental employment relationship. This is
nonsense. The method of dispatch has no bearing on the test for whether a worker is an employee with
full legal protections or an independent contractor with none. The legal standard remains one that looks
at the economic realities of whether the company retains the right to control the work done and the
means and manner by which it is performed.

The employer-employee relationship underpins all worker rights and protections. Nearly every right
established in California’s Labor Code applies only to employees, including the minimum wage,
overtime, lunch and rest breaks, parental leave, paid sick days, and protection from retaliation and
 
 

discrimination. The federal law on private sector collective bargaining, the National Labor Relations
Act, also applies only to employees. Companies contribute to social security, provide workers’
compensation, and pay payroll taxes only on behalf of employees.

For the past several decades, companies have sought new ways to evade and eliminate their
employment obligations and sever their ties to the people who do the work. Misclassifying workers as
independent contractors saves employers at least thirty percent and gives them a competitive advantage
over companies that hire employees. We have seen the rise in this illegal business model throughout
the economy, including industries like janitorial, trucking, garment, construction, courier, and even
agriculture.

The designation of independent contractor was never intended to apply to a worker who is
economically dependent upon and under the control of the company. A true independent contractor is
a separate business person, one who sets their own rates and performs work in the way he or she sees
fit, free from the direction or control of the employer. Current law is clear: an employer cannot make
a worker into an independent contractor simply by calling them one.

In fact, the gig economy has been plagued by worker lawsuits alleging misclassification. From
housekeepers to delivery drivers, workers across the country are fighting back. This bill is model
legislation being moved in many states by companies seeking to insulate themselves from worker
lawsuits.

At a time of extreme income inequality and declining union density, this bill would prevent an entire
industry of workers from accessing basic protections and would deny them the right to organize to
improve conditions. It would enrich some of the wealthiest companies in our state by shifting all the
risk onto the backs of working people.

We must oppose and urge you to vote “NO” on AB 2765 (Low) when it comes before you in the
Assembly Labor and Employment Committee on Wednesday, April 11, 2018.

Sincerely,

California Labor Federation

CA Conference Board of the Amalgamated Transit Union
CA Conference of Machinists
CA School Employees Association
CA Teamsters Public Affairs Council
Engineers and Scientists of CA, IFPTE Local 20
ILWU
National Employment Law Project
Professional and Technical Engineers, IFPTE Local 21
SEIU CA
South Bay Labor Council
State Building & Construction Trades Council
UFCW Western States Council
UNITE HERE
Utility Workers Union of America
Working Partnerships USA