Is CA right to rule Uber/Lyft drivers are employees?
- Uber was established in San Francisco in March 2009 as a revolutionary app “that let people tap a button and get a ride.” Since its startup, it has turned into a global empire of food delivery and self-driving cars.
- Lyft was founded in 2012 in San Francisco as well. Even though they came after Uber, the idea spurred on from a company called Zimride, which was meant to be a service offering long distance rides.
- California has been in a legal battle with both companies for months. The state says workers are being “deprived” of benefits as independent contractors. A law created January 1, known as Assembly Bill 5, or AB-5, said “companies can only treat their workers as independent contractors if those people are free from company control and perform work outside the company's core business.”
- On Thursday, October 22, a California court ruled that Uber and Lyft are required to label their independent contractors as employees.
California is trying to force Uber and Lyft's Independent contractors (aka Freelancers) to make them employees. This will limit their hours, flexibility, income, and freedom. Though freelancers have income without benefits, if Prop 22 is passed, they’ll soon have neither. Freelancers choose the rideshare lifestyle, and in 2017, half of freelancers reported 'they would not take a traditional job if it were offered to them, for any amount of money.' During this period, between the 17.2 million said 'they quit a traditional job to freelance, [and] two-thirds said they earn more on their own.' They are happy with the ability to choose freelance work and the freedom it affords. This law (AB5) isn't intended to help Freelancers, but to drive them out of business. AB5 was passed by Assemblywoman Lorena Gonzalez, a former union boss, who's on record, saying, 'These were never good jobs.' Millions of Californians who depend on rideshare and freelance economies don't agree. They couldn't afford to lobby for carve-outs from AB5 as it was being passed. Carve-outs cannot save bad laws. Because of this, the ridesharing industry 'estimates that AB5 will increase their labor costs by 20–30%.' When Uber/Lyft are forced to classify them as employees, they will fire some, strip hours of the remaining, and schedule them ahead of time, which removes their flexibility. This will also cause longer wait times and higher prices for customers. AB5 has already resulted in many job losses, pushing as many as 900,000 people out of jobs in the Freelance economies, women being especially affected. Forcing Uber/Lyft to classify freelancers as employees In the name of “adding benefits” is not progressive but totalitarian. Free the people to choose how, when, and for whom they want to work.
According to data from LIMRA, 16% of workers in the U.S. were 'earning income exclusively from gig work' in mid-2019, and that number is growing. This situation has been described as 'paving the road to serfdom' by world courts, as the gig economy provides none of the benefits or worker protections afforded by traditional full-time employment. This creates a worker-employer relationship more akin to what was prevalent before the early 20th century's labor movement won those benefits and protections. These companies have been taking advantage of a loophole, and Prop 22 is an attempt to make that loophole a permanent fixture.
Gig work companies have spent nearly $200 million in an effort to convince California voters that the workers are with the companies on this, but the recent suit from a group of drivers and labor activists shows that to be untrue. As pointed out in a New York Times article about the battle around the ballot issue, Uber and Lyft, in particular, have never been profitable to begin with. When considering the entire situation, it reveals a picture of a few executives at the top trying to squeeze what profit they can from a failed business model at the expense of workers.
Furthermore, as pointed out in Forbes, this could be seen as merely codifying what might be ruled by a court in any specific case anyway, as existing labor standards from the Department of Labor, the IRS, and various state and other laws might determine that they were classified as employees, in a third-party injury suit, for example.