The law, and sponsored by state Assemblywoman Lorena Gonzalez, would require many businesses to treat their gig workers as employees. It even caps the number of articles that freelance journalists can be paid for.
"Today, we are disrupting the status quo and taking a bold step forward to rebuild our middle class and reshape the future of workers as we know it," Gonzalez said when Newsom signed bill she sponsored. "As one of the strongest economies in the world, California is now setting the global standard for worker protections for other states and countries to follow,"
Here are some of the industries taking legal action over Assembly Bill 5, known as AB5.
U.S. District Judge Roger Benitez could grant a permanent injunction for the truckers after a Jan. 13 hearing. The California Trucking Association filed the suit in November.
CTA will push for a carve-out for the trucking industry since independent contractors, like insurance agents and attorneys, were exempted, its website says.
Uber and Postmates
Two of the companies that helped create the modern gig economy, Uber and Postmates, filed a lawsuit over AB5 on Monday in an effort to block the law.
"State legislators had the opportunity to expand benefits for hundreds of thousands of independent workers in California, a step Uber has been advocating for and one that other states already have taken," Uber said in a statement to FOX Business on Tuesday. "Instead, they passed AB5 using a biased and overtly political process ... We are joining a growing group of companies and individuals suing to ensure that all workers are equally protected under the law and can freely choose the way they want to work."
Entrepreneur John Chuang said Uber is on the "wrong side of history" for filing suit. Chuang is the co-founder of Aquent, which specializes in placing temporary employees in marketing and creative industries. He also served on the board of Angie's List.
"They could use all the hundreds of millions they're spending fighting these issues to give their drivers some good benefits," Chuang told FOX Business. "A vast majority of companies right now pay flexible workers as employees," Chuang said. "They use a variety of methods, hire directly or use staffing companies. This is how millions and millions of people work. We would only ask that the gig economy world does not have a free pass... They just don't want to pay taxes."
People earning income via gig work provided by Uber and Doordash aren't the only ones unhappy with AB5. Freelance writers in California are grappling with rejection letters — and decisions by sites like SB Nation to drop about 200 contractors — as part of the fallout from AB5.
"It's Christmas Eve Lorena Gonzalez," writer Jenna Busch wrote on Twitter in December. "Hope you're spending it with your family. Because of #AB5, I'm spending mine applying for jobs outside my field so I can pay my rent. Hope you're dreaming of sugar plums. I'm having nightmares about my future."
"This recent lawsuit filed by major corporate interests seeking to invalidate AB5 is the most recent demonstration on the war that is currently being waged against working people in our country," Ron Herrera, Teamsters international vice president, said in an official statement.
Herrera is also secretary-treasurer of the California-based Teamsters Local 396. Teamsters has 1.4 million members across many industries in the U.S. and Canada.
Just because they're included in AB5 doesn't mean workers like Uber drivers will unionize, Chuang said.
Other states like New York, where ridesharing companies and the taxi industry have long been at odds, may consider passing similar legislation, but proponents may want to take heed of AB5's rocky rollout.
"AB5 does have a flaw in its many exemptions. It exempted out many industries, marketing, lawyers," Chuang said. "A type of bill without as many exemptions would be, in some ways, more palatable. The idea is as a nation we have to come up with some sort of guidelines in terms of who is eligible to be an independent contractor and who isn't."