The US state of California has passed a legislation that would allow workers in the gig economy to demand holiday and sick pay.

This is considered among first legislations in the world that can upend and significantly affect the business models of companies like Uber and Lyft that are California based and is completely dependent on workers of the so called gig economy. According to some estimates, if the companies are forced to treat gig workers as employees, it will increase their expenditures by 30 per cent.

But those opposing the bill say that it will adversely impact those workers who seek flexible working hours. If the legislation is ultimately transformed into a law, the treatment of workers of the gig economy would be changed completely. The concept of the so called gig economy forms that basis of the business model that has been followed successfully by the ride-hailing companies and food delivery apps.

However, underpaying workers wasn’t innovative, said California state senator Maria Elena Durazo. This bill which is being called Assembly Bill 5, seeks make legal a ruling passed last year by the supreme court of the state. The court had ruled then that under the state law, all those workers integral to a company’s business or if the company tells them what to do, should be treated as employees.

The bill has been supported by a number of US Democratic presidential hopefuls including Elizabeth Warren, Bernie Sanders and Kamala Harris. The bill also has the backing of California Governor Gavin Newsom as his signature would be required to transform the bill into a law.

But a referendum on the decision has been proposed by both Uber and Lyft.

“We are fully prepared to take this issue to the voters of California to preserve the freedom and access drivers and riders want and need,” Lyft said in a statement after the bill was passed.

This proposed change in law would affect more companies apart from tech firms. Traditionally, the laws that are adopted, passed and enacted in California is later adopted by other states of the United States which has become a cause of worry for the Western States Trucking Association, a representative body of truck drivers of the country and many of its members are temporary and freelance workers.

“People ought to be very concerned because what happens here does tend to get copied in other states,” the group’s director of governmental affairs, Joseph Rajkovacz, the media. A set of tighter rules on vehicle emissions had been imposed by California which have been adopted later by a number of other states in the US.

Elsewhere, a Court of Appeal in the United Kingdom was also not convinced by the arguments made by Uber that its workers were not employees. Uber had approached the court with a plea to overturn a decision by the employment tribunal of the country that directed drivers of Ube rot be treated as employees instead of them being self employed and hence provide the statutory benefits to them.

(Adapted from BBC.com)

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