San Francisco City Attorney Dennis Herrera. Photo: Jason Doiy/ALM

Silicon Valley gig-economy companies are railing against eleventh-hour amendments to a state labor bill that would reclassify potentially millions of workers in California as employees, calling the changes "punitive" and "capricious."

At issue is new language in Assembly Bill 5 that would allow attorneys for the state's four largest cities to pursue injunctions against companies for any continued classification of their workers as independent contractors and not employees.

The legislation, which is expected to reach the governor's desk by the end of the week, would codify the California Supreme Court's 2018 ruling in Dynamex. That decision made it more difficult for gig companies to reject classifying their workers as employees entitled to wider protections such as minimum wage and benefits.

The late amendment appears to give significant litigation power to municipal attorneys in Los Angeles, San Diego, San Francisco and San Jose to wield against companies that have tried to avoid similar large-scale legal fights with their workers through arbitration agreements.

"We are concerned that this provision effectively weaponizes the statute and shows an intent for the underlying law to be applied in circumstances that circumvent due process," several companies, including Lyft and Uber, said in a Sept. 9 letter to legislative leaders. Three industry groups—the Bay Area Council, the Internet Association and TechNet—also joined the letter.

The letter asks for a one-year delay in the injunctive relief language so industry leaders can continue negotiations with Gov. Gavin Newsom on a possible new classification of workers that would not fall under the traditional definition of employees. Newsom has said he expects to sign A.B. 5.

"It would be punitive and would cause a damaging level of uncertainty for businesses throughout the state to allow industries that have shown good faith efforts on this issue, but have not yet secured a legislative compromise, to be arbitrarily targeted with lawsuits and injunctions," the companies and trade associations said in the letter.

Legislative leaders, however, have shown no interest in delaying the effective date of A.B. 5 or in granting bill exemptions to app-based, on-demand companies. A.B. 5 is awaiting a vote on the Senate floor. The Legislature is scheduled to end its work for the year on Friday.

"These gig companies don't want enforcement," the bill's author, Assemblywoman Lorena Gonzalez, D-San Diego, tweeted Monday night. "Why? Because at least one came to my office and said they'd just continue to litigate it & settle. No one should be above enforcement of wage theft."

City attorneys in Los Angeles and San Francisco have already taken legal action against ride-hailing companies on issues ranging from Uber's 2016 data breach to Uber and Lyft's attempts to shield information about their workers from local agencies.

San Francisco City Attorney Dennis Herrera expressed support for the new language in A.B. 5.

"The state doesn't necessarily have the resources to handle every case," Herrera said in an email. "City attorneys, district attorneys and other local prosecutors are a force multiplier when it comes to protecting workers and consumers. It makes sense to have effective enforcement. You do that by providing local prosecutors with the legal tools to do the job."

A spokesman for Los Angeles City Attorney Mike Feuer said he, too, supports the proposed injunctive authority.