In a landmark decision by the California legislature, “Assembly Bill 5” has been passed and signed into law after surviving a legal challenge in the Supreme Court last year. This decision is a global first in enshrining the rights of the modern, tech-based gig economy worker and is predicted to affect over one million California residents. Once active, the law will require that companies including Uber & Lyft offer a relationship with their ‘freelance workers’ that is subject to California’s existing labour laws including limits on hours worked, minimum wage, sick leave and unemployment insurance.
The bill, which passed by 59 votes to 15, was split along predictably partisan lines with the Democrat controlled legislature supporting the bill. The decision is momentous, not least for the million plus California workers but could set a much more interesting precedent.
In California alone, Uber and Lyft spent nearly $30 million each fighting the proposed legislation. Whilst this figure seems high, it’s estimated that their costs could rise by nearly 30% as a result of the bill – something that will surely concern similar companies who are already struggling to eke out a margin in a fiercely competitive marketplace.
Rise of the gig economy
On a global scale the rise of the gig-economy and freelance worker has been astonishing, growing 50% over the past 3 years. In the US alone the number of gig workers is estimated to be around 60 million – or 35% of the workforce – whilst Europe now estimates there are close to 15 million. The exponential rise of the freelance workforce is a much-discussed trend all across the globe, but is enough being done to protect the mushrooming amount of self-employed workers?
Here in the UK it’s safe to say similar legislation to AB5 will not be passed anytime soon as Brexit has quite literally caused a government shutdown. Though the gig economy in the UK is smaller in proportion to the US at 15% of the total workforce, it is estimated that by 2025 it could grow close to 50% . For anyone who frequents British cities this will be all too apparent, where every other car is an Uber (until you need one) and we have all become too lazy to pick up our own takeaways.
The flexibility and independence of freelance work is perfectly suited to many modern workers’ needs, but scratch beneath the surface and you discover an alarming truth. A high majority of self-employed workers are going about their jobs without either the protection – health care, sick pay, pension schemes, and other benefits – or the financial and legal advice they ought to have as a bare minimum. The scary fact is millions of people are leaving themselves extremely vulnerable when it comes to their financial wellbeing. The trade-off between salary, security and the gig economy is well trodden, but a solution is yet to be offered either by the government or private companies.
Public support
There is a severe gap in our public support system for freelance workers and the self-employed, actively harming a hardworking and dedicated section of the population. As with the Winter of Discontent in the 70s or the Miners’ strikes in the 80s, not providing adequate protections for crucial workers is a dangerous and often costly game to play. It may not cause rolling blackouts this time but the nation’s reliance on half hour food delivery, 24/7 instant taxis and courier services is real and increasing.
There are of course solutions being suggested from the tech industry, and the framework they’re building may well remain influential when governments eventually catch up. At least we here at Collective like to think so.
Our team is focused on this issue and is working to develop solutions for freelancers to access the same benefits and protection normally reserved for big company employees. The lack of formalized protections for such an expanding portion of our workforce was staggering to us; basic parental leave for both partners, insurance in the case of bereavement or even some peace of mind should you come down with a particularly bad flu. Fast forward ten years, when 50 per cent of the workforce will be without sick pay, hypothetically; who will look after their families if something happens? It is critical, therefore, for a global community of freelancers and self-employed workers to come together now to narrow that protection gap.
So, we did.
We believe our cover can actually help, and have worked out deals with insurers and forward thinking gig economy platforms to provide the highest level of protection at an affordable range of prices.
If you’re interested, sign up for updates and to join our waiting list below.
By Anthony Beilin
CEO & Founder at Collective
