Assembly Bill 5 is on its way to being signed into law, meaning that starting on Jan. 1, 2020, some California employers such as ride-hailing services Uber and Lyft could be forced some to classify independent contractors as employees.
After the state Senate passed the bill on Tuesday with a 29-11 vote, on Wednesday the State Assembly approved amendments made to the bill and it is headed to the desk of Gov. Gavin Newsom.
“Now heading to the Governor’s desk!” Assemblymember Lorena Gonzalez, D-San Diego, who authored the bill, wrote on Twitter Wednesday.
“Our AB5 to stop the misclassification of nearly a million misclassified California workers so they are provided a minimum wage, benefits and workplace rights passed the Assembly with 59 votes,” Gonzalez wrote.
AB 5 aims to codify a state Supreme Court decision last year that said in order for workers to be considered independent, they must: be free from the direction and control of the hiring entity; perform work that is outside the usual course of the hiring entity’s business; and be customarily engaged in an independent business.
Gig Workers Rising, an organization dedicated to fighting for the rights of ride-hailing service drivers and other gig workers, had been advocating for the passage of AB 5. According to the group, the reclassification of gig workers would give Uber and Lyft drivers, as well as other similar workers, basic protections like minimum wage, health insurance and paid sick days.
Now that the bill is likely to be signed by Newsom, Gig Workers Rising said it will next fight for drivers’ right to form a union.
According to Tony West, Uber’s chief legal officer, AB 5’s passage could pose a potential harm by forcing drivers to become employees, ultimately taking away their flexibility and their right to work various jobs
at the amount of hours they want.
The ride-hailing service is “disappointed” it wasn’t able to reach a compromise with lawmakers on the bill, West said.
But, he said, the company is confident that under the new employee requirements defined by the bill, called the “ABC test,” drivers would be still be classified as independent contractors.
Additionally, West said Uber will be backing a ballot initiative in 2020 that would ask voters to decide on whether to create a new employment category for ride-hailing service drivers.
“We’re looking to hire the best campaign team and the best advisors that we possibly can to help us run a successful ballot initiative,” he said. “This was not our first choice to try to run an initiative. In fact,
this is something that became an alternative only when it looked like we were unable to come to any kind of negotiated compromise with the parties.”
Ultimately, he said Uber is seeking to “put forward a framework that works for the 21st century economy and we believe that we have a framework that does that.”
West said according to Uber’s own studies, an overwhelming majority of drivers prefer to stay as independent contractors.
“That kind of flexibility and that kind of independence is something we really believe in preserving,” he said.
In a statement, Lyft spokesman Adrian Durbin said Lyft would also
be supporting a 2020 ballot initiative to keep drivers independent.
“Today, our state’s political leadership missed an important opportunity to support the overwhelming majority of rideshare drivers who want a thoughtful solution that balances flexibility with an earnings standard and benefits,” he said. “We are fully prepared to take this issue to the voters of Calfiornia to preserve the freedom and access drivers and riders want and need.”
45 comments
In the worker survey paid for by Uber I wonder how impartial it was? “Continue working for less than minimum wage or a sharp stick in the eye?”
Are the drivers going to have to meet any additional criteria? I rarely use these services unless I’m with a group. I always assume it is basically “assuming the risk” by going with a stranger in their personal vehicle. How will this differ from them working for a taxi company?.
Do you know who’s driving your taxi? Uber drivers are tracked and riders rate the driver. I know much more about my Uber driver than my taxi driver. And taxi’s are the most disgusting vehicle’s on the road.
DID someone conduct business in CA and neglect to make campaign contributions to the politicians running this state ? ? ? ?
Now that Uber and Lyft have ruined the Taxi business it should be interesting to see what happens.
If ride-sharing services cost as much as taxis, then there will be incentive enough for taxi services to come back.
Absolute BS! Now cost to riders will skyrocket as Uber and Lyft will be no different than a taxi. Unions? Pensions? Overtime pay? Minimum wage? This State is so effed up and totally run by unions. Can’t wait to vote this down in 2020.
that was to goal.
Wasn’t the original concept of these services appealing BECAUSE the drivers were not employees?? They could set their own hours, log in and out of the system, and make money for driving folks around. I’m not sure making the drivers employees is a good idea. That being said, even though the services supposedly vet the drivers I have heard of too many (and 1 is too many) incidents resulting in injury, rape, and even murder, by these “vetted” drivers that I will NEVER use one of these ride sharing (sic) services.
I live off Willow Pass and Olivera road, my mechanic is on Momnument next to Costco. When I recently needed to get my car I thought I would try Lyft, but it seemed to get the app was time consuming and they wanted my credit card number before I even booked a ride. I called a cab and with tip it cost me $17.00 so the few times I need a ride, if a friend is not available to take me I will just call a cab. A few years ago when my car died on the San Mateo bridge, and it was raining and dark I paid $80.00 (cash) for a cab to take me to Concord. The Uber driver I talked to said it would have been less with Uber, perhaps $50.00 or so.
Hanne:
Not sure why you’re apprehensive giving them a credit card. It’s the 21st century. You aren’t responsible for fraudulent charges, end of story.
Just FYI, I live very close to Willow Pass and Olivera. An Uber trip as you describe would probably be less than $10. It’s worth the savings. Also, not sure how long you wait for a cab, but an Uber is almost always less than ten minutes away.
Uber and Lyft were never meant to be full time jobs. They were your side-hustle to make extra cash. If you work for a company, and don’t like their rules, go work for someone else. I have a feeling this is gonna blow up in a lotta faces.
Bob Foo I know I’m not responsible for the charges, but I have had my wallet with credit cards stolen and it’s a big hassle and time consuming. Anyway I need a taxi perhaps 2-3 times a year. I called Diablo Cab there came in 10 minutes. Anyway thanks for the tip.
Uber and Lyft aren’t making a profit as it is. I wouldn’t be surprised if they double down on getting an automated system rolling and just saying bye-bye to drivers all together.
Its happening one way or the other.
Bank on it
Bob: If you mean autonomous vehicles on open public thoroughfares as we know them, that is many years away. Some kind of controlled, more or less closed loop system, yes, that could possibly happen more quickly.
I recently met an Uber driver, I work at Stanford Shopping Mall and I lost my keys, it was after 10 p.m. and most cars had left. He stopped and helped find a locksmith that was willing to come at that hour and make a key so I could get home to Concord. While waiting I chatted with him, asked if he also had a day job, he said he worked at the Mall as a security guard full time at night, and during the day he drove for Uber. He said he made good money, I don’t think he would want to have to show up at 9 or 10 a.m. He was very personable, and being right by Google and Facebook I imagine he probably has some steady customers, he also said he would pick up really good rides from Palo Alto to the airport etc. I’m a licensed insurance agent, although not active now, but when I sold long term care insurance I was an independent contractor, got a 1099, since the company provided me with leads and training, the could and did require a certain amount of production each month. One company wanted a certain submitted premium
another a certain number of application. How I reached that goal they didn’t care about, I could do it in 3 days a week, or 6 days, I could start every day at 8 a.m. or 11 a.m. or whatever. Now I work for Macy’s they tell me when I have to be there, what days, and when I get off. Only flexibility I have is if I don’t like the hours or days given, I can change with another employee or I can try to give my shift away. I get certain benefits with Macy’s as a full time employee, health, dental, 401K etc. but I made more money as an insurance agent. There is something to be set for each situation, but a lot of people, especially if Uber or Lyft is their second job want the flexibility.
Okay, first off, it’s gotta be like 99% of drivers–once you factor in insurance, wear & tear, gas, time, etc–do not really make much money at all. I’m not a prolific user, but I’ve probably used those services about 50 times, and all but a handful of those I talked with the drivers, and almost every one of them said they don’t make NEARLY what they thought they would and that they were either in the process of quitting or would in the near future.
So with that said, this stupid intrusion by nanny state California likely will serve to increase pay…but it will also effectively kill this business model because this will heap layer upon layer of overhead costs that Uber/Lyft currently don’t have. One colossal outcome will be the cost of rides will skyrocket, thereby eliminating one of the most attractive features of these services.
I’m sure how much the drivers make has to do with the location. I imagine someone driving in Concord, Antioch, Benicia make less than those in the cities, SJ, Oakland, San Francisco or the Peninsula. The driver I talked to sounded very pleased, but he also had a night job, came off as an ambitious young man. The insurance business was no different not everyone make what they thought they would, but those who made the phone calls, set appointments, showed up on time, knew their stuff and followed up, and gave excellent customer service did just fine. So perhaps they were told they could make $100.000, but made only $80.000 they still did okay, you only have so much control, but if you keep at it, it pays off.
Uber and Lyft will fight it, but if they lose, they’ll leave CA and move their corporate offices out of state. Uber is worldwide and they’ll lose the revenue associated with CA, but they’ll be fine. I, however, will be forced to use a stinky, less convenient and more expensive taxi.
I’ve never used either service, know little about them, but I’m gonna go ahead and have a strong opinion anyway. Just haven’t chosen which one yet. Don’t rush me.
So, then nothing has changed, eh.
so basically the unions slapped the politicians because they were not getting their mob cut
you see the greatest trick the mob ever pulled was convincing you they didn’t exist
now a honest independent service liked by the people is being rearended by politicians to take away from the peoples freedoms once again with out a vote
welcome to the union of communist socialist democrats
you must be proud
Don’t believe everything you read or hear these days. Please sign.
What I find surprising about Uber and Lyft’s justification for keeping their driver’s as independent contractors was reported they believe that driver’s aren’t “core” to their business model, software is. I’ve never heard such a load of bs in my life and I can’t believe they even advanced such a bizarre idea. They wouldn’t have a business model without drivers. Just goes to show you how upside down and backward the free reign that has been given these companies has turned into some sort of exploitive nightmare.
Having worked as an independent contractor, I know first hand that it has good points and bad points. The flexibility is great. However, when it comes to benefits you are on your own, and the work I did was not profitable enough to purchase health insurance, take sick days, or vacation. But, the real downside became apparent when it came time to pay taxes. State, Federal, and Social Security taxes were not withheld, so I had to come up with the full amount on my own when it was due. It also didn’t pay very well considering I had to use my own car and cover car maintenance and auto insurance myself. After a year or so, I decided it was an arrangement that benefited only the employer.
They are preparing for driverless cars. “Drivers” are not their core business. They will get spanked, operate in the red, defer the losses and smash when they cut the useless feeders. Don’t make a career out of it.
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@Sam In other words, they are just “using” the drivers to further their business model. Then what? When they no longer need them, the driver’s will not have paid into unemployment insurance, or Social Security. Unless they can find other employment, they become society’s responsibility.and when they reach retirement age, unless they have plenty socked away on their own, they will have no retirement funds to live on. It is a thoroughly disgusting thing that these companies are allowed to exploit their workers to make huge amounts of money and then discard them like so much trash when they no longer find it convenient to have them around.
Why are you blaming Uber for this? It’s not like Uber held a gun to these people’s heads and forced them to play taxi driver. They chose that on their own. Nobody promised them anything about retirement or benefits. They knew what they were getting into.
@Foo It’s simple human decency. It’s what distinguishes man from animal. It is about concern for one’s fellow man. Uber executives are getting rich off of their exploitation of other human beings, offering them nothing now or on the future for their effort. Have you seen Uber and Lyft ads for drivers? They most certainly DO MAKE PROMISES.
Gittyup- But we are all responsible for your own choices. You cannot always blame poor choices on everyone else. It is called personal responsibility. These drivers simply have to do the smallest amount of research to become informed. All the info is out there. They choose not to and THEY choose not to save their money for retirement. Everyone knows that SS was meant as a safety net and NOT to fund your whole retirement, but people keep saying the opposite hoping it is true. It is no one’s fault but the person making the bad decisions. And why should people’s habitual bad decision have to be my problem all of the time? Why do I have to pay for people who choose not to care about their futures?
@gittyup Yes they are just “using” the employees. As do ALL companies. You are used until you can no longer work or the company goes out of business or they no longer want you to work there or they don’t need you. That’s the nature of work. Nobody is promised anything in this world. If you want some kind of guarantee that’s it. All this talk about greedy corporations is a waste of time, ask the coal miners. My best suggestion is learn to code.
To be fair, I guess at least you won’t get raped or assaulted by a driverless car. I have never taken either Uber or Lyft because having work as an independent contractor in another industry, real estate photography, I know that it is exploitative of the worker. I’ll take a cab which is highly regulated — for my safety.
I would bet most of their drivers would not qualify for anything else, or, have some other extenuating circumstances that forced them to chose to be employed with Uber or Lyft. Uber, in particular, has been exposed for their toxic work environment. Nobody choses to be abused if they are sane. It may take awhile for them to realize that is what their employer is doing as independent contractors, but no one choses abuse. And, most employers have more concern for their employees than to do so, if they want the job done right.
You’re calling that some of them work 80 hours a week a poor choice? A poor choice? Really! Would welfare suite you better as a source of their income. Obviously, they are motivated workers, any employer would be lucky to have them. But, they aren’t making enough to cover expenses and earn a living wage … especially if they are having to work more than 40 hours per week. I’ve been there, done that, and it is WRONG, morally, ethically, and in a country with a capitalist economy, it is not in keeping with the spirit of capitalism.
Uber and Lyft can pay them better or deal with a union. It’s up to them. I suggest for their own survival they deal with it themselves by offering their independanr contractors better.
Dear Democrats,
Your party calls itself progressive. What a joke. You kill a new and growing business model offering workers maximum flexibility in order to force them back into your antiquated union model.
I double dog dare you to put single payer in place. This is your state. You can do whatever you want. Fact is your leaders are hypocrites. They would never force their government union bosses to trade their gold-plated medical plans for Medicare-for-all.
Uber and Lyft are not the only ones affected. The newspapers have be going on about the delivery people are also independent contractors. They are saying this will hurt the newspaper business since a lot of the delivery people deliver for more than one newspaper.
Employees need to fill out an I-9 resident verification form (a Federal Form), yes it is easily circumvented with a fake SS #, but the Feds are getting better at culling them, this will make it easy for ICE to screen a lot of people for enforcement, I wonder if the Sanctuary Folks in Sacramento thought about this??
To be fair, I have taken Uber and Lyft many, many times. Hundreds of times over the last few years. And never once did I get the impression that I was being picked up by an illegal immigrant.
The average ride-sharing driver is middle eastern or white. Which represent much lower percentages of illegal immigrant numbers.
I’m all for cracking down on illegal immigration, but I don’t think ride-sharing is the thing to worry about.
I am sure that many families, in the past fleeing from gangs, rapists and you know______. Fill in the blanks for yourself, are well aware as well.
Yes I have also had a life long debilitating injury trauma in my younger days, and thank God there was a medical coverage plan in effect. I don’t interfere in doctor/patient confidentiality.
Another pt. to be made that many ignore or fail to see, unforeseen; is that many motorists carry bare minimum Insurance coverages, and absolutely no medical plans in place. Are there no solutions for these sets of circumstances? re; employers/employed employees/independent contractors
You make an excellent point.
The minimum property damage coverage in California is $5k. With the value of most cars nowadays, that’s not very much. One of my cars is a 2018 German sports sedan. The rear bumper is equipped with multiple ultrasonic sensors that are part of the parking assist system, and there are additional sensors in the front bumper, the windshield, etc.
If I get rear ended or hit in some other way, the repair is much more than simply slapping a new bumper on. There are electronic devices that have to be replaced and/or calibrated. This ends up being stupid expensive. So ultimately I carry extra coverage to account for those who might not have enough liability insurance to handle this sort of thing.
Which is fine. I don’t expect someone to have extra insurance because I drive an expensive vehicle. But even my cheaper vehicle, a 2015 Japanese sedan, is still worth a bit, even if it doesn’t have the technology that new cars have. Getting a car repainted by a reputable body shop can easily break the $10k mark.
My point is that with the ever-increasing cost of cars, the minimum liability coverage isn’t enough anymore.
The kicker is that most consumer insurance companies won’t cover your claim if you’re using your car as a ride share. And for that kind of coverage, the drivers might may two or three times as much. Which, deep down, we know they’re not doing because they literally wouldn’t be able to make a profit.
Ride shares claim to be technology companies but they charge the rider and driver a mandatory technology fee for each ride and then take 20%-25% of the fare (time + mileage) from the driver. Taking from the driver’s fare changed them from a technology company to a transportation company.
If they truly wanted to be a technology company they could have had the drivers register with the PUC or other 3rd party to register and verify drivers identity, what rideshare company(s) they want to work for and then continued to collect a technology fee only. When they register they choose part time under 30 hours per 5 day work week or full time 30 plus hours to determine if they are eligible for benefits. If the driver chooses 2 rideshare companies they could work 60 hours a week part time up to 80 hours a week full time. Same as if you are currently working at 2 jobs to make ends meet or need extra cash. Rideshares already force drivers to stop driving by automatically logging them off after 12hrs every 24 hours via the app.
Most drivers don’t drive for less than an hour so this flexibility argument is crap because you could divide minimum wage by 60 mins to pay them for portions of an hour they do drive or have the app on. When they drive for 29:59 hrs in a week the app will log them out until they register as full time and the rideshares agree to extend your hours to 40hrs plus benefits and report it to the PUC or 3rd Party of the change. Otherwise you would wait until the following week to start driving again.
If ride shares lose at the ballot I suspect they will cut the mileage from the fare and force drivers to wait until end of the year to claim it on their taxes. Or they will only allow part time hours to avoid benefits.
.When they go autonomous they will cut the time rate from the fare and only charge for mileage which both companies have publicly said would be a target of about $.20 a mile.
I would almost like to see Uber and lyft decide to pull out of the California market and sit black and watch the fireworks.
classified as employees we will make less so I’m curious if it’s worth it. I make 30$ an hour quite often. The downside is the cost of gas (200 a week) and my rental payment (213 a week)
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