In light of gig worker protections bill AB5 passing in the California State Senate last night, and amendments to AB5 passing in the Assembly this morning, Uber has made it clear it plans to do whatever it takes to keep its drivers independent contractors.
“We will continue to advocate for a compromise agreement,” Uber Chief Legal Officer Tony West said on a press call today.
As Uber outlined last month, the company is pushing for a framework that would establish a guaranteed earnings minimum while on a trip, offer portable benefits and enable drivers to “have a collective voice.”
He went on to say that Uber is continuing to explore several legal and political options to lay the groundwork for a statewide ballot initiative in 2020. Uber and Lyft announced a $60 million joint initiative last month, and now, West is saying Uber is open to investing even more money in that committee account.
“This is not our first choice,” West said. “At the same time, we need to make sure we are exploring all options and all alternatives to put forward a framework that works for the 21st-century economy and we believe we have a framework that does that.”
AB5 would help to ensure gig economy workers are entitled to minimum wage, workers’ compensation and other benefits by requiring employers to apply the ABC test. The bill, first introduced in December 2018, aims to codfiy the ruling established in Dynamex Operations West, Inc. v Superior Court of Los Angeles. In that case, the court applied the ABC test and decided Dynamex wrongfully classified its workers as independent contractors.
According to the ABC test, in order for a hiring entity to legally classify a worker as an independent contractor, it must prove the worker is free from the control and direction of the hiring entity, performs work outside the scope of the entity’s business and is regularly engaged in an “independently established trade, occupation, or business of the same nature as the work performed.”
If Uber were to fail this test, drivers would not be able to determine when, where and how often they work, nor would they be able to work for more than one platform at a time, West said.
“I do think there would be significant changes in the experience drivers would have,” West said.
But West believes Uber would not fail this test. While it will be required to pass this test in the likely event AB5 gets signed into law, West pointed out “we have been successful in arguing under this ABC test in the past that drivers are independent and independent contractors,” West said. “We believe that to be true.”
There would surely be a financial impact if Uber fails the test, but West declined to comment on just what that fiscal impact would be. Industry analysts, however, have estimated it could result in up to a 30% cost increase.
As noted earlier, the bill is expected to pass, as Gov. Gavin Newsom has previously expressed his support for the measure. Though, Newsom said earlier today, he’s still in negotiations with both Uber and Lyft.
“The governor has been pretty clear he is fully committed to a negotiated solution here,” West said. “He’s been clear to us on that message in private and has publicly stated that now.”
Following the bill’s passing in the Senate, Lyft said the state missed an opportunity to support the majority of rideshare drivers who want a solution that balances flexibility with earnings standard and benefits.
“The fact that there were more than 50 industries carved out of AB5 is very telling,” a Lyft spokesperson said. “We are fully prepared to take this issue to the voters of California to preserve the freedom and access drivers and riders want and need.”
Earlier today, Lyft sent out an email to drivers regarding AB5 and how if it’s signed into law, drivers “may soon be required to drive specific shifts, stick to specific areas, and drive for only a single platform (such as Lyft, Uber, Doordash, or others).”
Despite what Uber and Lyft are saying, there are a number of drivers who have fought long and hard to ensure the bill passes. Two of the main organizations behind the actions in support of AB5 are Gig Workers Rising and Mobile Workers Alliance. In addition to urging legislators to pass AB5, Uber and Lyft drivers organizing with Gig Workers Rising also want the right to form a union.
“AB 5 is only the beginning,” Edan Alva, a driver with Gig Workers Rising, said in a statement. “I talk daily to other drivers who want a change but they are scared. They don’t want to lose their only source of income. But just because someone really needs to work does not mean that their rights as a worker should be stepped all over. That is why a union is critical. It simply won’t work without it.”