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Last updateTue, 18 Sep 2018 1pm

Julie Su wants the world’s fifth-largest economy to remain a global juggernaut. To do so, California’s labor secretary acknowledges, the state will need to position its workforce for the jobs of the future—a catchall term that encompasses not only the promise of innovation, but also the dystopian threat of increased income disparity.

Economists project massive upheaval from disparate forces such as automation and an aging population. California’s challenge, as Su sees it, is to roll with those disruptions while making sure jobs here continue to pay a living wage, offer worker protections and accommodate working families.

In short, she wants the future of work to bridge today’s wealth gap. A labor and civil rights attorney—and past recipient of a MacArthur Foundation “genius” grant—Su has been leading the Future of Work Commission alongside Chief Economic Adviser Lenny Mendonca and Senior Adviser on Higher Education Lande Ajose. They have been hosting meetings across the state with the goal of coming up with a new social compact for workers.

Meanwhile, Su—whose full job title is secretary of the California Labor and Workforce Development Agency—has committed to a new future-of-work department to execute the commission’s findings and recommendations. In an interview, edited here for length, she spoke about the commission’s goals and how she plans to enforce California’s own recent workplace disruption—the new worker classification law known as AB 5.

What are we looking at in terms of future of work? And why should Californians care about this topic?

We hear so much about how A.I. (artificial intelligence) is going to destroy jobs, such as how a robot will take the place of humans. But the commission was formed under the principle that there’s nothing inevitable about the shape of our future economy. We can, through policies and interventions … come together to reverse the 40-year trend of growing income inequality and poverty.

What’s your understanding of the distribution of wages right now, whether it’s gender, race or geography?

Over one-third of working people in California make less than $15 an hour. And a full 20 percent of those earning less than $15 have a college degree or some college education, which forces us to think about the connection between education and job opportunity, right?

It’s not enough to address the cost of things; we also have to address how much people actually make, so we have to focus on the quality of jobs.

Over the last 40 years, productivity has increased by 259 percent, but wages only by 11.6 percent, which means that we have a massive distribution problem. The productivity gains are going somewhere, but they’re not going to working people. And that’s creating not just income disparity, but also wealth disparity.

And the racial wealth gap is astounding. The median wealth of black families who have a college education is below the median wealth of white families who do not have a college education. Those are the problems we need to solve.

So what are examples of solutions?

I don’t want to pre-suppose what the commission’s going to come up with. I think that there are some policies, strategies and ideas that have been tried and we just need to expand them. We’re looking here and elsewhere in the world. What lessons do they have for California? And then, I think that there are ideas and solutions that sitting here today we have not yet imagined.

Can you at least tease me with an idea?

For example, at the first meeting, the commission had a panel of four workers, and one had a union job where she worked as a janitor. The union job actually helps to preserve her security, but that job was also subcontracted out, and when it was, she’s lost certain things like a retirement benefit.

So clearly, one part of the answer is: What is the role of union? And how do we ensure that unions are strong and can organize and, given changes in the economy, are supported in new ways of organizing? There’s data that shows that having a union does more to ensure higher wages than even having a college degree.

The second was a warehouse worker who talked about how he basically felt like a number. Automation was used … to set a high level of surveillance, and he felt expendable. So what ways can technology innovate, not just for the benefit of the shareholders and consumers, but for the benefit of working people?

Then the other two workers who spoke were in workplaces, both of whom have received money from the Quality Jobs Fund, a collaboration between the Federal Home Loan (Bank of) San Francisco and the New World Foundation. And the fund was used for capital investments in companies that meet certain job-quality criteria. These two workers both talked about how their jobs allow for a living wage, have flexibility—one of them had a special-needs child and needed to go to appointments—(and) that include benefits, access to training and professional development, and then upward mobility and a chance to build wealth.

All those suggest higher labor costs for employers, though. Is there a point where government then starts to subsidize private industry in order to provide a private-sector worker with better wages? Is that a direction we should contemplate?

I think everything is on the table. What the governor has charged the commission with is to think really boldly, not assume that anything that’s already in place has to be here or that anything we haven’t yet seen is impossible to create.

In parallel to the commission, we’re also creating a future-of-work department under the labor agency. We’re going to create a department that will be poised when the commissions has its recommendations to actually execute many of them. That’s how concrete we want to be.

Part of the initial phase of the department is really just to realign existing service inside of government. One of the things that I think is very frustrating to people who try to interact with the government and try to access services, is when we say to you, “not this agency, the next agency.” What I want to do is eliminate the next window problem: “You’re in the wrong line, go to this next line.”

You want to create one line in which people can get what they need when they seek help from the government. It’s not just about creating new legislation and new powers; it’s about taking powers you already have and creating one streamlined, efficient and accessible department.

The governor signed AB 5, the worker-misclassification bills, and it will now take effect in January. I’m wondering what will you and your agency’s role be in enforcing that?

I often say that the instability that working people face—partly because of misclassification—has resulted in the day-labor-ization of our economy. Instead of steady, consistent, reliable work, people end up basically in odd jobs, and you’re hustling all the time, right? So AB 5 is meant to address that kind of misclassification so that we can bring more people who should be under the protection of our labor laws back on that floor.

We’re going to be enforcing both through our wage-claim process, where individuals who feel like they have been misclassified can come and file wage claims. An example of that is we’ve had almost 1,000 cases in the port-trucking industry filed before the labor commissioner that we’ve adjudicated and found millions of dollars owing to truck drivers who have been misclassified.

The other is just doing investigations and audits. That will be on both wages and tax, because AB 5 expands the ABC test that way. So we will be doing investigations and audits so that those who want to comply with the need to reclassify can do so, and those who don’t will understand that’s not the kind of economy we want in California. So we can issue citations and demand both wages and taxes and other kinds of penalties.

Do you expect to investigate Uber and Lyft?

We do not talk about who we will investigate or the fact we are investigating. I do want to say that misclassification did not arise when the gig economy came into being. And it will not be ended by that. We also are hopeful that there are businesses who will join us in this administration who are committed to combating misclassification and also find new ways for workers to organize.

There are some workers who have been excluded from federal protections, and California has a really unique opportunity to bring them into the fold and think about ensuring that they have true union protection working side by side with labor and businesses who are interested in doing that.

Did you have conversations with Uber, Lyft, DoorDash, Postmates or any other entities?

We did. I think we always want to work with—whether it’s business or labor—on trying to solve some of these complex and intractable problems. As the governor said when he signed AB 5, we want to continue to be open to those conversations and whatever possibilities they might bring about for trying to improve working conditions and the lives of the drivers in California.

Why wasn’t a third way accomplished in the last legislative cycle? Why couldn’t a compromise be done?

That’s a good question. We wanted to make sure we were working with folks who wanted to talk about this, but I don’t think there was a deadline in our minds for that. These ongoing issues; they’re very complex. And when we talk about creating a voice for workers, that it’s really a voice premised on unions—like a genuine right to a union on the job. If we can accomplish something, it will set a model for the country. 

What’s realistic for the state or local government to stem this growth in wealth inequality? You’re setting up high expectations here. We have a capitalistic society, so what’s doable here?

We would rather set really high standards for ourselves. And if we cannot reach them all, we at least challenge ourselves to give it everything we’ve got. We are looking at this from all angles. There may be some simple things that we can do. Some of them are building off the great innovation and talents of people in California already. Are there models we can replicate and support and share so that people who want to do this right don’t have to invent it from scratch? At the first meeting, we talked about tax law, about social structures.

We don’t have an end date for the commission’s work. We have monthly meetings from now until April. We will also be issuing a report in May that’s a part of the governor’s executive order. We’d like to make sure we engage with a broader segment of Californians around what whatever the recommendations are, and that could be academic institutions, philanthropy, worker centers, the tech industry and business. 

CalMatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Local Issues

Do you freelance in California? Have a side hustle? Drive trucks? Work construction? Do nails? Work on political campaigns? Then you should be paying attention to a major employment fight coming to a head in Sacramento.

In the coming weeks, the state Senate will begin hearings on a bill that will make it harder to classify workers as independent contractors, officially codifying a sweeping 2018 California Supreme Court decision. The so-called “Dynamex” bill, supported by organized labor and named for the court case, has made headlines for threatening the on-demand business model made popular by the likes of Uber, Lyft, DoorDash and Postmates.

Less discussed, however, is the extent to which Assembly Bill 5 could sweep up some 2 million workers across industries far from the sharing economy and tech sectors, from truck drivers and general contractors to nail salons, strippers and perhaps even the freelance writers for this newspaper. The proposal has so unsettled mainstream businesses that they’ve banded together with sharing economy disruptors to run an “I’m Independent” campaign.

The legislation would rewrite the rules for when a worker is deemed an official employee, upending longstanding employment practices by winemakers, private investigators, music schools and other enterprises.

“Does AB 5 have very wide repercussions? Yes, that’s what makes the negotiations very complicated,” said labor-rights attorney Bill Sokol, who teaches employment law at San Francisco State University and is not a part of the negotiations.

California has long led the nation on employment practices, and AB 5 may be just the beginning as policymakers wrestle with updating labor codes in today’s app-for-hire world. Though the high court decision clearly raised the bar for treating workers as independent contractors rather than full employees, the devil is in the details that will be spelled out in the pending legislation.

AB 5 is being lobbied heavily both by business advocates and by organized labor, which seeks to ensure that gig-economy workers have workplace protections, including the right to collective bargaining. It has also put Gov. Gavin Newsom, who wants to be viewed as an ally to both labor and tech, in an awkward position.

“Everything is up for grabs,” Sokol said. “There’s no way to predict who’s going to end up with what. But labor recognizes that the American workplace they have traditionally organized—those worker relationships—have changed, and the laws have not kept up with them.”


Labor groups led by the 2 million-member California Labor Federation have united behind the proposal to limit the use of independent workers. Their contention: The gig economy has opened the door to mass exploitation of low-wage workers, a trend that is worsening income inequality.

Too many employers misclassify employees in order to cut costs, the unions argue, and strong curbs on the use of independent contractors, who aren’t eligible for many of the benefits and workplace protections mandated for regular employees, would slow that. Those curbs would also make it easier to reach groups, such as general contractors, that have long been difficult to organize.

But business advocates warn the change would dramatically ramp up labor costs in California, and have dire consequences for the state’s economy. In some sectors, such as ridesharing, widespread contracting isn’t even the long-term business model—it’s just an intermediate phase on the way to automation. Uber or Lyft, both headquartered in San Francisco, might stop operating in California altogether, they say.

Their hope is to carve out a third way that would allow employers to grant some benefits without having to categorize workers as full employees.

“We have a completely different economy,” said Jennifer Barrera, executive vice president at California Chamber of Commerce. “We have a huge group of individuals who really value their flexibility and control over their own schedule, and I don’t think it has to be one or the other.”

The California Supreme Court decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles dealt with a same-day courier service that, to save money, had converted all its employees to independent contractors. A former employee claimed the shift was a Labor Code violation, and the litigation that ensued ended up reinterpreting a longstanding test for classifying workers. The ruling instead established a three-part test for certifying independent contractors, with the highest hurdle being that the work performed must be outside the core of the company’s business.

Even though the Dynamex decision is already law, labor representatives say many companies have been flouting it. AB 5 would ensure that workers would not have to file suit on a case by case basis to seek enforcement.

“There’s a whole bunch of things that they’re currently being cheated out of, frankly,” said Steve Smith, with the Labor Federation. “With respect to Uber and Lyft, it’s the exploitation they subject their workers to on a daily basis. Many of these workers are not receiving minimum wage; they are misclassified as contractors when they actually should be considered employees, meaning there’s a whole host of benefits they’re not getting that they should get like everyone else.”

In steering more people to employee status, the bill would force companies to offer basic worker protections such as guaranteed minimum wage, overtime pay, contributions to Social Security and Medicare, unemployment and disability insurance, workers’ compensation, sick leave and family leave. Workers could also get reimbursed for mileage and maintenance of their vehicles.

The state estimates it loses about $7 billion a year in payroll-tax revenue due to worker misclassification that could be supporting schools, roads and other public services. And by avoiding unemployment insurance taxes and workers’ compensation premiums, businesses shift the burden to the state when workers get laid off, get sick or get injured on the job.

“These billion-dollar companies can complain, but we have to ask ourselves as taxpayers: Should we subsidize their business by subsidizing their workers?” said Assemblywoman Lorena Gonzalez, a former labor organizer from San Diego who is author of AB 5. “That’s what happens when you don’t adequately compensate workers.”

She dismisses the idea that Uber and Lyft will flee the fifth-largest economy in the world. More likely, the lawmaker predicts, Uber and Lyft will make the changes required by law, because there’s a massive market for transporting individuals and goods in California. If they can’t manage it, she says, then someone else will.


Gonzalez’s bill is triggering pushback in part because the impact of the high court ruling is far broader than many Californians expected. Gonzalez says she’s heard, for instance, from newspaper publishers who want to keep using freelance journalists and beauty salons that rely on nail technicians. She’s even rattled folks in her own world of politics, because her bill would reclassify campaign workers as employees, not contractors.

Chris Shimoda, vice president of government affairs with the California Trucking Association, says trucking has been a pathway for people without advanced degrees to make more money. In fact, about 80 percent of drivers in the industry have a high school education or less, he said. But if firms are required to employ their own drivers, independent drivers who own their own $150,000 Class 8 heavy duty trucks may not be able to find work.

“We all agree there should be a pathway, especially for the blue-collar working class to rise up the economic ladder,” Shimoda said. “It’s just: What are the rules for the labor and employment law side of things? If there are specific things that have been abused, then what are those, and how do we reconcile that through this bill?”

As his association works to ease the potential impact of AB 5 on those drivers, the trucking industry has challenged the Dynamex decision in federal court, arguing that federal laws governing motor carriers pre-empt the state test.

Peter Tateishi, chief executive officer of the Associated General Contractors of California, which represents construction firms, said the bill would disadvantage small businesses, many of which are women-owned and minority-owned firms, that subcontract with builders, because contractors won’t be able to get outside help.

As for Uber and Lyft, the rideshare companies have sought compromise and held back-channel negotiations with the Teamsters and Service Employees International Union. The Labor Federation, however, remains committed to full employment status for rideshare workers. As a result, the gig economy companies have sought support in the court of public opinion.

In an open letter, Uber Chief Executive Dara Khosrowshahi and Lyft co-founders Logan Green and John Zimmer proposed maintaining their drivers’ freelance status but granting access to some employee benefits such as paid time off and retirement accounts. The executives, whose combined worth is over $1 billion, offered to form a new driver association to advocate for the drivers’ interests.

“We are public companies that tens of millions of people rely on for mobility and work,” they wrote. “If there ever was a time for new policies, it’s now.”


This week, the “I’m Independent” coalition led Uber and Lyft drivers around the Capitol to meet with lawmakers and staff to voice their desire to remain freelancers.

“I’m very offended that they would think they’re doing us a favor by calling us employees,” said Vivian Mallory, a 60-year-old Uber driver in Sacramento. “We want better rates, and we want more opportunities for benefits. I think we’re not against the bill being passed, but I think we want changes in the language.”

Mallory says she’s strategic about picking up longer rides that pay more and was able to average $4,800 a month last year driving. Another Uber driver, James Kyle, 58, of Roseville, said he needs to remain an independent contractor, because he works seasonally at charity golf tournaments.

“They’re taking the fun away from it,” Mallory said.

AB 5 supporters counter that drivers will continue to maintain a flexible schedule, because rideshare companies, like any employer, can pay wages based on the number of hours worked.

On the other side are drivers like 62-year-old Ann Glatt, who joined the Gig Workers Rising movement after noticing her share of fares declining over time with Lyft. She says she’s lucky to make $700 a week and would like to see changes to the way the rideshare companies categorize their drivers.

“Teachers are in unions. We’re not able to unionize because we’re independent contractors,” Glatt said.

She added that the labels put on drivers can be misleading.

“Uber and Lyft are not transportation companies—they are platforms. So that makes us customers, and the passengers are the end user. But really it kinda just means Uber and Lyft are not responsible for basic labor standards for people,” she said.

After speaking to CALmatters, Glatt said she stopped driving Lyft because she wasn’t able to make ends meet.

Requests for exemptions have so far succeeded in some sectors. Gonzalez has agreed to leave doctors, insurance agents, real estate agents, hair stylists/barbers who hold a booth rental permit, dentists, architects, engineers and accountants out of the law.

But business interests are pressing for more. Barrera said CalChamber would like to carve out licensed occupations, from court reporters to family therapists. While the author is committed to sorting through more positions, Gonzalez said the exemptions will need to stop at some point.

“I have a driver’s license,” she said. “That doesn’t make me a business owner.”

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Politics