Rideshare companies may compete fiercely on the road, but when it comes to classifying drivers as employees, they are rock-solid united. The CEOs of Uber and Lyft penned an opinion-editorial in the San Francisco Chronicle voicing opposition to a new California law that would re-designate their drivers from independent contractors to employees – with all the actual legal benefits and bargaining rights that entails.
The company has long been extremely reticent to classify these workers as “employees,” arguing their business model is unique in that it merely connects riders to customers, and is not a traditional “transportation company.” It owns no vehicles, drivers have no direct supervision and drivers are free to set their own hours, types of vehicles/services. The company does, however, insure drivers and provides a host of standards and criteria workers are required to meet.
However, Assembly Bill 5 – a broad piece of legislation that will become law if it gains the vote of the state senate as well as Gov. Gavin Newsom’s signature – would expand the definition of “independent contractor” to more closely match that which was outlined in last year’s California Supreme Court decision in Dynamex Operations West Inc. v. Los Angeles Superior Court.
As our Los Angeles employee misclassification attorneys can explain, this ruling held that if a worker was to be designated as a “true” independent contractor, he or she would need to be:
- Free from the direction and control of the company that hired them;
- Performing work outside the company;
- Conducting work independently of the trade.
Most likely, drivers for the two publicly-traded rideshare companies wouldn’t fit that bill, and thus would be categorized as employees. The state law would solidify that decision by adopting those provisions into state statute. Already, drivers are in ongoing talks with labor unions.
Rideshare Companies Propose Alternative to Driver-Employee Designation
The rideshare companies, meanwhile, are eager to present alternative options to state lawmakers, asserting that such regulation would pose a major threat to their business model, potentially forcing them to close shop in certain cities.
As an alternative, the companies are proposing, instead of a brand new law, an amendment to the state’s current employment law that would provide drivers with:
- Worker-set benefits;
- Paid time off;
- Retirement planning;
- Ongoing education plans.
All this would be arranged through a portable benefits system. Further, workers wouldn’t be designated as either “employee” or “independent contractor,” but rather as something different – an entirely new category all their own that more closely aligns with the industry model. Drivers would get a series of benefits typically afforded only to employees, but would not be formally designated as such.
If state lawmakers decide to go along with their plan, it would be the first of its kind in the country, and it’s plausible other states could follow suit. But drivers in these cases likely would still be exempted from certain employee-only benefits, such as workers’ compensation.
Gig Workers Gain Growing Clout
The fact that the state’s measure has so quickly picked up steam points to a growing trend toward enhanced employment protections for workers in the so-called “gig economy.” Los Angeles employee misclassification lawyers know it wasn’t so long ago these workers were deemed as being on the fringe of the employment landscape. There’s been a marked shift.
Rideshare drivers in Los Angeles were the first to spark a recent strike, with those in many other cities soon following. Lyft and Uber know that designating drivers as employees would come with a range of upfront costs and implications for potential legal liability. This has brought them to the table to propose a compromise. Whether workers – or lawmakers – will be amenable remains to be seen.
Contact the employment attorneys at Nassiri Law Group, practicing in Orange County, Riverside and Los Angeles. Call 714-937-2020.
California Assembly passes gig work bill, limiting contractor status, May 29, 2019, By Carolyn Said, The San Francisco Chronicle