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.
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.
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?