How this new legislation could shape the gig economy and college sports forever

Two new pieces of legislation passed in California recently could shape the gig economy and college sports for good.

California lawmakers passed the Assembly Bill 5 on Wednesday, a bill that grants gig economy workers more benefits like holiday and sick pay, which is expected to affect popular car-sharing services like Uber and Lyft, which both operate out in California.

Earlier in the week, California also passed the Fair Pay to Play Act, which would make it illegal for California schools to snatch athletic scholarships or eligibility away from student-athletes as a form of punishment for accepting endorsement money.

Both of these bills challenge the way the world operates right now, and both could be the start of something that’s plagued both industries for years.

Assembly Bill 5

The bill would reclassify gig economy workers to employees instead of contractors and would affect those defined as independent contractors which include Uber and Lyft drivers, as well as other contractors at food-delivery services like DoorDash and Uber Eats.

The law, which is slated to take effect in 2020, has been something in the foreground with lawmakers accusing big tech companies of exploiting workers in recent years.

“Let’s be clear, there’s nothing innovative about underpaying someone for their labor and basing an entire business model on misclassifying workers,” said California State Sen. Maria Elena Durazo, D-Los Angeles, a co-author of the bill.

Uber released a statement saying it won’t be reclassifying its drivers to employees because the bill doesn’t require them to do so.

“Contrary to some of the rhetoric we’ve heard, AB5 does not automatically reclassify any ride-share drivers from independent contractors to employees,” said Tony West, chief legal counsel at Uber, in a statement. “AB5 does not provide drivers with benefits. AB5 does not give drivers the right to organize. In fact, the bill currently says nothing about ride-share drivers.”

The bill has been backed by numerous Democratic presidential candidates including Bernie Sanders, Kamala Harris, and others.

Fair Pay to Play Act

The Fair Pay to Play Act is something that could prove pivotal in college sports.

The NCAA brought in $1 billion in revenue in the 2016-17 school year, largely generated through college basketball’s March Madness. The key players, college athletes, don’t receive a dime of that money and are unable to profit off their name, image, or anything. If they do so, past cases have stripped college athletes of both their eligibility and scholarships.

The proposed legislation, which was sent to California Gov. Gavin Newsom, would not go into effect until 2023 but would grant college athletes rights that are nowhere else in America. While schools cannot pay athletes, the bill would allow athletes to hire agents in order to be paid for use of their name, image or likeness, which the NCAA currently doesn’t allow.

The NCAA argued its harmful and unconstitutional in a letter sent to Newsom on Wednesday.

“If the bill becomes law and California’s 58 NCAA schools are compelled to allow an unrestricted name, image, and likeness scheme, it would erase the critical distinction between college and professional athletics and, because it gives those schools an unfair recruiting advantage, would result in them eventually being unable to compete in NCAA competitions,” read the letter, according to the Los Angeles Times.

The bill has been backed by politicians and athletes including Golden State Warriors star Draymond Green and Los Angeles Lakers star Lebron James.

“California!!! Extremely excited about the bill that passed tonight allowing players to be paid,” Green tweeted earlier this week. “Finally, we are making some progress and getting this thing right. Kids going to sleep hungry, can’t afford ANYTHING yet these Universities are profiting off those same kids. SIGN IT!!”

James, who’s been vocal about fair pay, tweeted Wednesday in response to the NCAA’s rebuttal calling for a policy that is fair to athletes.