Uber and Lyft have threatened to shut down within days after a court ordered them to immediately reclassify their independent contractors as employees.
Will Uber + Lyft Shut Down In California?
On Monday, Superior Court Judge Ethan Schulman ruled that drivers for Lyft and Uber must be given the same benefits and protections under California labor law as other employees of the company pursuant to AB5, a recent California bill which seeks to extend employment protections for so-called gig workers. That includes health insurance, paid sick and family leave, and workers’ compensation. Meanwhile, Lyft and Uber continue to insist that their drivers should be classified as independent contractors.
Judge Schulman wrote:
“Were this reasoning to be accepted, the rapidly expanding majority of industries that rely heavily on technology could with impunity deprive legions of workers of the basic protections afforded to employees by state labor and employment laws.”
Meanwhile, Uber spokesperson Matt Kallman told NPR:
“The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law. When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression.”
The order takes effect in 10 days, giving Uber and Lyft time to appeal. Both have threatened to suspend service in California if forced to reclassify workers.
A spokesperson for Lyft noted:
“Drivers do not want to be employees, full stop. We’ll immediately appeal this ruling and continue to fight for their independence. Ultimately, we believe this issue will be decided by California voters and that they will side with drivers.”
Indeed, this question will be put to voters in the November election. Prop 22 seeks to protect companies like Lyft and Uber by allowing them to classify drivers as independent contractors.
The Debate
If you have some time, listen to this four-minute report by Bobby Allyn that aired on NPR’s Weekend Edition this morning.
Allyn did a great job in presenting both sides of this issue and I must admit I side strongly with Uber and Lyft here. Those companies have worked hard to innovate and provide part-time opportunities for millions of workers and with the exception of the mafiosos in Washington, DC, Uber and Lyft drivers seem very thankful for the opportunity. I use both services often and I don’t view this as a red herring. No, we cannot have our cake and eat it too. Uber and Lyft already lose money. If these drivers are forced to be reclassified as employees, not only will there be fewer of them, but the cost of rides will go up in such a way that it will no longer make sense to leave the car at home. Thousands will lose their livelihoods. That is self-defeating public policy, especially during these turbulent economic times.
Listen to the driver interviewed above. He makes a compelling case for why these drivers should continue to be independent contractors. Being classified as an employee will not help workers when they are all expelled from their job.
CONCLUSION
I’ll be voting for Prop 22 this November in California and hope that Uber and Lyft will be able to continue to innovate and cultivate their business model in a way that preserves the rights of workers to set their own schedules while also not strangling these ride sharing services with obligations that destroy the business model.
What are your thoughts on the status of Uber and Lyft drivers in California?
The law is asinine. I know AB5 was written specifically to force Uber and Lyft into this situation, but it had collateral damage as well, including for me as a part-time freelance writer. California needs to roll this back. I sure hope the voters do in November.
Why are we paying them unemployment then, if it quacks like a duck and walks like a duck. Then they are full time employees already.
That’s an issue to take up with California officials, not Uber/Lyft.
It’s not a CA issue, either. The federales, by way of the CARES Act, specifically allowed contractors to apply for unemployment benefits. So you’ll have to take it up with the Congresscritters in DC.
Your statement about Congress is true, but CA has an expanded program for independent contractors and gig workers.
I don’t know about the Calif program but Uber’s CEO reached out to Trump and members of Congress to include unemployment assistance for gig workers in the CARES Act. While I agree with the decision, gig-based companies should have to pay into the unemployment system so that it funded for future situations that are similar.
Also, check out Uber’s CEO NYTimes editorial this past week. His proposal is interesting, although I would say a gig worker who works 35/hrs per week should get a larger benefit contribution than what he suggested.
They are not profitable now, they would go bankrupt under new regulations. In addition, if drivers are employees, that means that uber/lyft wouldn’t have to let drivers pick and choose when to drive. This is not a bluff. Uber and Lyft will absolutely shut down operations in California. I suspect food delivery services would be in the same boat. It is not a viable business model with drivers as employees. Be careful what you wish for, activist lefties. I wonder if you will ever figure out the law of unintended consequences.
Pot meet kettle…like a POTUS who profits from his presidency?
Or has “heads” of key government agencies who profit off of their restrictions & throttling (aka DeJoy)?
Oh sweet irony that you can’t even recognize it with the one you worship.
Holy irrelevancy Batman. You sound like a typical fully brainwashed leftist. Do you really believe that nonsense? Anything relevant to the issue at hand you want to share?
I’m not into hero worship, I support politicians based on policy. Dems are the ones getting tingly feelings down their legs from their chosen ones, like Obama. Besides, Trump lost money on being president, that should be pretty obvious to any sane person.
And holy shit, Biden’s son getting board gig for burisma with no relevant experience when daddy is heading Ukraine policy, then daddy gets prosecutor fired that was investigating company…you still pretend like that didn’t happen? Dems are corrupt 5x over, and it stands to reason since you’re the party of big burdensome government, which leads to more corruption.
Now sit back and watch Uber and Lyft show you why leftist policies don’t work.
Unsurprising that someone with TSS (Trump Sycophant Syndrome) would “many people on both sides” a non-entity like Hunter Biden’s short-term $50K/month contract with the effing President bilking taxpayers for stays at all his properties, trying to add in $1.75B to a Covid bill to keep the FBI building (across the street from his hotel) off the market, etc.
Trump “losing money off his presidency” claim only fools blind loyals like you who don’t recognize he has decades of experience of running his businesses into the ground all by himself.
Ironic that Trump’s (pre-Covid) budget deficit has exploded vs. Obama, just like Bush exploded Clinton’s balanced budget, and you keep trotting out the “big government” line. It’s quite amusing (and pathetic) at this point.
You took the bait on the whole Burisma thing. Of course they were trying to curry favor when they hired Biden’s son and paid him an absurd amount given his complete lack of experience in the industry.
The factual and relevant retort is that the prosecutor whom Biden got fired was actually impeding an EU investigation into corruption at Burisma by having perpetually open (but not moving forward) a domestic investigation into the same thing. So, that prosecutor was actually protecting Burisma and, whether intentionally or not, Biden’s son from an EU corruption investigation.
Part of our labor market includes the ability to work as an independent contractor. Citizens should have the ability to work the way they please. Contractor work can be very lucrative and the freedom it affords is worth a lot in itself. (Speaking from personal experience)
All Americans need an affordable options for healthcare, not just employees. Instead of regulating enterprises like this, tax those who profit off them and provide services like healthcare to the citizens!
I agree that part of our labor market includes IC labor. But IC labor means that UBER can’t tell it’s drivers how to do their jobs, or supply the equipment. So that means no Covid cleanliness standards, or mask requirements, or UBER provided wipes and sanitizer. Yet UBER (and Lyft) do those things.
Seems like customers want the consistency (and cleanliness standards) of employee service, but don’t want to pay for them. And what they don’t want to pay for is (1) retirement contributions, (2) paid sick days, (3) health care benefits, and (4) worker’s compensation insurance.
What nobody seems to be bringing up is how without a law like this the little person continues to get hosed. If Uber, Lyft, etc. would have spent some time trying to find practical solutions to the problem rather than just hurling lawsuits at rules they don’t like, maybe we’d get somewhere. Where’s the viable counter proposal? This is like when Walmart chose to shut down their store in Canada when the store voted to unionize rather than deal with a situation.
As an outsider to this issue, I would suggest that maybe doing something like making a company responsible for the ancillary employment costs in proportion to the amount of work or revenue: if you make 10% of your money somewhere, then that place can pay 10% of your health insurance and unemployment. I’m not saying that’s the answer but the judge had a valid point; the question is how to address it in a reasonable fashion.
This is a more complicated issue than it seems for a lot of reasons, though there’s three that stand out:
1) While I greatly prefer working as an employee, there are a LOT of Americans who actually want to work as independent contractors. They don’t want to have to answer to a boss, want to set their own hours and make their own choices on which projects to work on, want to play games with tax deductions not available to employees, etc.
2) A fair number of Uber/Lyft drivers I’ve spoken to over the years already have full-time jobs/businesses doing something else and/or have a spouse working full-time and receive benefits through them. They really are just picking up a few hours here and there, either because they’re bored, they think driving people around is fun, to pocket some extra cash for a specific purpose or help out with expenses, etc. Employment protections provide no benefit for these drivers, and the extra costs likely put them out of a job entirely.
3) Unions serve a purpose but also complicate matters. If Uber/Lyft drivers become employees, almost certainly to be subject to unionization since it’s CA, does it benefit the “little guys” driving when their work rules prohibit them from picking up fares outside of the geographic area they live in? Or allow only those with X amount of seniority to pick up surge fares?
Now the flip side is you do have a large number of drivers who essentially work full time for crap wages and no benefits. Many of these are former taxi or shuttle drivers who were put out of business by Uber/Lyft. And yes, that’s a problem – though AB5 works exclusively to the benefit of that subset of drivers while screwing over those legitimately using driving as a side hustle.
You raise some superb issues. That makes it even stranger to me that nobody involved seems to be pushing for a workable middle ground that would address at least a sizeable part of the problem, even if the whole problem is to big to effectively handle in one piece of legislation.
This is a tough situation to call, but ultimately this is comes back to being all about choice. Choice on the part of the drivers to do the work offered by the app platforms with the conditions set forth, and choice on Uber/Lyft’s part in how they want to offer their product to customers and give work out to drivers. That’s fair.
Now, considering these companies have yet to figure out any kind of remotely viable business model (massive sarcasm and mocking tone there), it makes me laugh they would fight and spend so much to fight in favor of such complacency. I mean, Uber and Lyft are acting like spoiled brats wasting all of mommy and daddy’s (i.e. investors) money fighting this, and giving no leeway towards a compromise. The things they’ve proposed thus far are pretty laughable.
Can the PR reputations of these companies get any lower at this point? I guess let the people of California decide…
I pay taxes. I’m done subsidizing this sh**. If you’re working for these co’s full-time, you’re an employee, period. Maybe they can offshore the work to India or China like the other Bay Area companies…..oh wait…that won’t work.
I’m so burned out on us selling each other out. A fair days’ work deserves a fair days wage. At the end of the day, someone is going to pay, and as a taxpayer, I’d rather not be subsidizing this business model.
It appears that without all of the chicanery, these companies don’t have a business model that is profitable. Unfortunate, but reality. Own it. Make money or end it.
I deleted Uber after all off their issues, but the final straw was that a driver took me up a one way street in their home town of SFO. Never again. The brand is poison to me.
I’ve been renting cars and taking taxis since 2017. It’s not that bad. It is the better alternative.
Good luck with it.
Uber and Lyft have prices that (unless surge pricing is going on) undercut taxicabs, which is why people use them. If they were subject to the same regulations as the taxicab companies they would have to charge significantly more. The fact that these companies are losing hundreds of millions a year if not more is a clear indication that their fares are too low. And I don’t like the idea that any creep with a Prius can start hauling people around. It is worth it to me to take public transit or a REAL taxicab.
One time I was on an Amtrak train approaching Penn Station. A woman with two teenage children indicated to her kids that they were going to the World Trade Center area “and we’ll just get an ‘Uber’ when we leave the train.” The subway from Penn Station goes directly there, for less money, and faster. Geez.
you’re like a conduit for information. You just repeat what news/media already report. Old news. What value do you add?
In addition to useful commentary on this issue and others, Matthew provides entertainment when jealous losers like yourelf come out to levy churlish attacks while he laughs all the way to the bank wtih your extra clicks. Keep insluting. We all laugh at how patethic you are.
@Don, are you talking about your own comment when you say “what value do you add?”
And Uber and Lyft wouldn’t exist if cab companies didn’t end up as monopolies. Too many drivers try to screw the customer and had filthy cabs.
I do agree that if a business is only viable with independent contractors then it probably shouldn’t be in business. Companies go that route or outsource stuff because it is cheaper and they can deny responsibility for not providing benefits.
Official: See ya Cali https://www.lyft.com/blog/posts/ca-operations-update