Uber, Lyft Look to Kill California Law on App-based Drivers

Last Updated on October 7, 2020 by Mike Dean

Californians are being asked to vote on whether Uber, Lyft, and other application-based drivers ought to stay independent contractors with flexibility over their schedules or be qualified for the benefits and protections that come with being company employees.

The fight between the bosses of the gig economy and labor unions, including America’s largest union, the International Brotherhood of Teamsters, could turn into the costliest ballot measure in state history. Voters are considering making an exemption to a new state law that intends to provide wage and benefit protections to drivers.

Ride-hailing giants Uber and Lyft have taken support from app-based food delivery companies DoorDash, Postmates, and Instacart after having fought in a losing battle in the Legislature and courts. They are now using more than $180 million for the November 3 election.

Uber and Lyft are based in San Francisco, and both have stated they may leave the state if the ballot measure falls short. Early voting in California begins Monday.

The app-based business model grants driver’s freedom and autonomy to choose when to work but does not offer benefits and protections like minimum wage, overtime, health insurance, and reimbursement for expenses. The landmark labor law referred to as AB5 threatens to dismantle this business model.

David McCuan, California’s Sonoma State University political science department chair, said, “What’s at stake is the future of labor, the nature of work, how conditions are changing for households amidst the pandemic and recession.”.

Labor-friendly Democrats in the Legislature passed the law last year to expand upon a 2018 ruling by the California Supreme Court that limited businesses from classifying workers as independent contractors.

Uber and Lyft have insisted that their drivers meet the qualifications to be independent contractors, not employees. They also explained that the law did not apply to them because they are not transportation companies, they are technology companies and their drivers are not a central aspect of their business.

A San Francisco Superior Court Judge ruled the companies are obliged to the new employment standards after Attorney General Xavier Becerra took the companies to court. However, that ruling has been postponed while the companies appeal.

Any ruling could be undone by the result of the vote, though further proceedings are likely.

If Proposition 22 passes, it will absolve application-based transportation and delivery companies from the labor law, and the drivers would continue being independent contractors exempt from mandates for overtime, sick leave, and expense reimbursement.

But it also would put in place policies that require those companies to give “alternative benefits,” including an ensured minimum wage and subsidies for health insurance if they average 25 hours of work a week.

The ride-hailing and delivery companies have exhausted more than $180 million to pass the measure so far, while labor unions have spent more than $10 million to defeat it.

McCuan said the companies are probably going to set up another $100 million or more, making it more costly in today’s currency than a 1998 proposition that made room to permit Native American tribes to operate casinos in California.

“Big Tech has joined the big, bad bogeymen of California politics. If you’re going to push something and you’re going to have difficulty in the Legislature because Democrats own the Legislature and labor is a 900-pound gorilla in Sacramento, you have to… go around the Legislature.”, McCuan said.

The Covid pandemic has hammered Uber and Lyft as more people stay and work remotely and don’t travel. Then again, more people are having food and groceries delivered from app-based services such as Postmates and Instacart. Some gig workers have moved to those platforms for work, earning what they say are lower wages.

Most Uber and Lyft drivers interviewed throughout an hour recently at Los Angeles International Airport said they support the measure, with all referring to the opportunity to set their own schedule and maintain different sources of income from working other jobs.

Jeff Hodge, a standup comic searching for his big break, sees the advantages and disadvantages of the two sides, yet being independent is a better fit for him.

Hodge said, “If I was a regular Joe, I’d be an employee. It all depends on your lifestyle. If I wasn’t doing anything else, I’d want the benefits. I’d want to be able to come in and guarantee a certain number of hours, get a certain amount of pay, to go home.”