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Bold New State Law to Massively Reshape California’s Food Delivery Industry

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If signed, AB 5 will classify drivers as employees at companies like Postmates

Uber Eats food delivery services bicycle rider in the street.
Uber Eats food delivery services bicycle rider in the street
Daniel Vazome via Shutterstock

The California Senate passed Assembly Bill 5 during the state’s fall legislative session, signaling a serious change in the employment status of gig economy workers. Restaurant delivery drivers for services like Uber Eats, DoorDash, and Postmates, formerly classified as independent contractors, will soon be designated as official employees, increasing their labor rights and access to things like more competitive pay and healthcare. The change is being hailed as a victory for labor rights activists, but others argue that it will come with a price.

AB 5 is awaiting Governor Gavin Newsom’s signature, but its passage is seen as inevitable as Newsom has previously penned his support in a Sacramento Bee op-ed. If it is indeed signed, it would mean that, starting on January 1, 2020, hundreds of thousands of drivers, including ones that deliver restaurant food, will now be officially considered a part of the companies they drive for in the state of California.

According to Nation’s Restaurant News, AB 5 will improve life for restaurant delivery drivers, but could make food and delivery services pricier for Angelenos. These drivers would be eligible to unionize, receive minimum wage, paid sick days, and health insurance benefits, among other workplace benefits. With these new costs, that ramen or sushi delivery could include a higher service fee. Delivery companies are also likely to raise monthly subscription fees to pay for the cost of these new employees.

At present, gig workers do not qualify for food stamps, state healthcare, workman’s compensation, or other safety net benefits. This would change completely under AB 5. Delivery drivers stand to make an improved wage, rather than relying on the number of deliveries and tips. In July, DoorDash came under fire after a New York Times reporter discovered that delivery people’s tips were funneled to the company. DoorDash changed its tipping policy as a result.

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