They just refuse to reclassify their drivers as workers.
Earlier this week, both Uber and Lyft threatened to close down in California as a result of a ruling that would force them to reclassify their drivers as employees. Lyft even declared that it would stop surgeries starting this Friday. But in a few hours, that would no longer be necessary. Thanks to an appeal filed by both firms, a court had granted a temporary reprieve to allow them to continue business as usual. The appeals process could go on for months, as both Uber and Lyft attempt to get more time.
The stark reality is, however, both companies have had nothing but time to abide by the law. The simple fact that they fought , stalled, made excuses and so are funding a ballot proposal that would reverse worker rightsis a indication that these businesses have no intention of following the principles or giving their drivers the advantages they deserve. They had their period, but they squandered it.
The legal drama began last year when California's legislature signed Assembly Bill 5 (also known as AB5) to legislation. The intent of the law was supposed to induce gig economy companies like Uber, Lyft and Doordash to reclassify their workers as workers so that they can get rewards such as minimum wage, overtime, paid leave and healthcare -- the latter of which is now even more significant during the pandemic.
The reason for this law affects businesses like Uber and Lyft is they are reliant upon independent contractors, however, AB5 has pushed to explicitly define what that term implies. It is due to a landmark 2018 California Supreme Court ruling that required the so-called"ABC evaluation' (that is already used by the US Department of Labor and over 30 states) to determine if a worker is an independent contractor. Someone can only be considered an independent contractor if they meet three criteria: they have control on how the job is completed, they're doing work that is not in the usual course of the hiring entity's company and they are running the exact same sort of business by themselves. To begin with, most drivers would not run a taxi service independently on their own; this would really be illegal in many regions. Plus, while drivers may have control over their schedules, they do not decide what routes to choose or what rates to charge. "[The companies], by using their algorithms, pressure drivers into taking rides without discrimination. So, arguably, the motorists aren't in control on how they do their business."
The standards that they definitely fail, based on Koonse, is that drivers are absolutely doing work that's in"the usual course of business" for Uber and Lyft. "Lyft and Uber do not provide any other service! All they provide is this taxi company type service," she explained. Uber, for its part, has contended that it isn't a transport provider and that motorists aren't core to its business, saying that it's a"tech platform for many different kinds of electronic marketplaces."
"Be as it may, the only thing they are supplying technology-wise is that a ride with a person that has a car," explained Koonse. "Transportation is their business." Even though Uber does provide other services like food delivery, drivers continue to be an integral part of its work force; it is just that rather than transporting people, they're transporting food.
And if Uber and Lyft don't think of the drivers as workers, many motorists sure do. Uber and Lyft often assert that their drivers are mostly part-timers, searching for extra money on the side. However, according to some 2018 poll of over 300 drivers in Los Angeles County, two from three drivers rely on rides as their chief source of income. One in 2 said it is their only occupation and three drive more than five days weekly. In addition, it shows that most drivers want reimbursement for car maintenance as well as access to worker's compensation and health insurance.
The legislation has been on the drivers' side.
In response, Uber and Lyft have cried foul, claiming that they're simply unable to abide by law. It might have a"devastating impact" in their companies, would induce them to increase fares and hire fewer people. They said they would suspend their operations rather than comply. Uber CEO Dara Khosrowshahi said that his firm can't employ all of its drivers in California. "We can not go out and employ 50,000 people immediately," he said in a meeting with the Pivot School podcast.
Except, of course, they had more than 24 hours. "Uber and Lyft had two freaking years to change their business practices, but they are acting like they're so shocked," explained Koonse.
"The companies have experienced years and multiple invitations to obey the law and grant employees the worker status and benefits they are legally owed," explained Edan Alva, a motorist and secretary with Gig Workers Rising, a collective of ride-hailing drivers and gig employees fighting for worker recognition and employee rights.
"In spite of multiple court rulings and a deadly pandemic, multimillionaire CEOs in Uber and Lyft are deciding to continue to violate the law," he explained in a statement. Alva added that shutting down operations at the center of a pandemic casts the firms in a much worse light. "Eliminating thousands of motorists' income during a pandemic to prevent following labor law is cruel."
Khosrowshahi did develop a potential solution, which calls on authorities to make a third kind of classification for gig employees. "[Each] time a business provides additional advantages to independent workers, the independent they become." He said that"we need new legislation" and they could not act on their own. He also proposed a general benefits fund that employees can draw for certain items like paid time off or health care, while still preserving their independence.
But coming up with this proposal now, almost a year after the passing of AB5, is really far too late. And as Koonse points outside, Uber might have implemented such a benefits fund on their own without government aid. "I really don't understand why they're not yet providing these advantages," she said. "I really don't know why they haven't already categorized people as workers. They had two decades. They should already be supplying benefits as required under the Affordable Care Act. Period."
Another option which Uber and Lyft floated would be to employ a franchise-like version, where they would permit their manufacturers to operators of vehicle fleets in California so that they would not be completely responsible for hiring employees or paying benefits. However, that is not entirely the case . "That's not going to get them out of liability in California," explained Koonse. "In California, the franchisor is liable for wage and hour law just as far as the franchisee. We have very strong joint liability and joint employer legislation here."
Rather than complying with the legislation, Uber and Lyft have decided to partner with DoorDash to increase almost $100 million to finance Proposition 22, a ballot initiative which could essentially roll back AB5 and permanently classify ride-hailing drivers as independent contractors. In reaction to the temporary reprieve yesterday, Lyft sent the following statement in support of this:
"While we won't have to suspend operations tonight, we do need to continue fighting for liberty plus benefits for motorists. That is the solution on the ballot in November, and it is the alternative motorists want since it preserves their capacity to make and to use the stage as they do today -- whenever they need -- while also getting historic new benefits. With no 80-90% of Californians who make on app-based platforms will reduce that opportunity." According to Koonse, Proposition 22 would walk back the ABC test mentioned earlier so that they would not have to provide minimum wage in addition to proper benefits.
"They would not have to provide all of these tough rights that workers are eligible for," she said. "It'll even amend the state Constitution to allow it to be such that the legislature and local governments can't undo it. It is super creepy"
Alva of Gig Workers Rising believes that by threatening to shut down, companies are trying to frighten politicians and employees into voting for Proposition 22. He said in a statement:
"The shutdown is an attempt to scare politicians from regulating violent companies and scare workers and other voters into supporting the companies' undemocratic ballot initiative, Prop 22. This childish behaviour is unacceptable and we need that Uber and Lyft comply with the law and grant workers the employee status and benefits we're owed. Doing this will save lives during this pandemic. We also request that voters vote on Prop 22, which has been completely funded by gig companies hoping to overthrow their exploitation of workers"
Meanwhile, in case Uber and Lyft aren't able to appeal their case in court, they will be back to square one. John Cote, a spokesman for the San Francisco city attorney, told the New York Times:"These companies may have bought themselves a little more time, but the cost is they need to demonstrate -- under oath -- which they've got an implementation plan which complies with the legislation [...] The court of appeal is still calling Uber and Lyft's bluff."
As for Uber and Lyft's claim that it just isn't possible to function in California without independent builders, Koonse said that, yes, they would probably have to increase prices and change the way they operate, but that is part of their obligation. "It's on them to figure it out."
Earlier this week, both Uber and Lyft threatened to close down in California as a result of a ruling that would force them to reclassify their drivers as employees. Lyft even declared that it would stop surgeries starting this Friday. But in a few hours, that would no longer be necessary. Thanks to an appeal filed by both firms, a court had granted a temporary reprieve to allow them to continue business as usual. The appeals process could go on for months, as both Uber and Lyft attempt to get more time.
The stark reality is, however, both companies have had nothing but time to abide by the law. The simple fact that they fought , stalled, made excuses and so are funding a ballot proposal that would reverse worker rightsis a indication that these businesses have no intention of following the principles or giving their drivers the advantages they deserve. They had their period, but they squandered it.
The legal drama began last year when California's legislature signed Assembly Bill 5 (also known as AB5) to legislation. The intent of the law was supposed to induce gig economy companies like Uber, Lyft and Doordash to reclassify their workers as workers so that they can get rewards such as minimum wage, overtime, paid leave and healthcare -- the latter of which is now even more significant during the pandemic.
The reason for this law affects businesses like Uber and Lyft is they are reliant upon independent contractors, however, AB5 has pushed to explicitly define what that term implies. It is due to a landmark 2018 California Supreme Court ruling that required the so-called"ABC evaluation' (that is already used by the US Department of Labor and over 30 states) to determine if a worker is an independent contractor. Someone can only be considered an independent contractor if they meet three criteria: they have control on how the job is completed, they're doing work that is not in the usual course of the hiring entity's company and they are running the exact same sort of business by themselves. To begin with, most drivers would not run a taxi service independently on their own; this would really be illegal in many regions. Plus, while drivers may have control over their schedules, they do not decide what routes to choose or what rates to charge. "[The companies], by using their algorithms, pressure drivers into taking rides without discrimination. So, arguably, the motorists aren't in control on how they do their business."
The standards that they definitely fail, based on Koonse, is that drivers are absolutely doing work that's in"the usual course of business" for Uber and Lyft. "Lyft and Uber do not provide any other service! All they provide is this taxi company type service," she explained. Uber, for its part, has contended that it isn't a transport provider and that motorists aren't core to its business, saying that it's a"tech platform for many different kinds of electronic marketplaces."
"Be as it may, the only thing they are supplying technology-wise is that a ride with a person that has a car," explained Koonse. "Transportation is their business." Even though Uber does provide other services like food delivery, drivers continue to be an integral part of its work force; it is just that rather than transporting people, they're transporting food.
And if Uber and Lyft don't think of the drivers as workers, many motorists sure do. Uber and Lyft often assert that their drivers are mostly part-timers, searching for extra money on the side. However, according to some 2018 poll of over 300 drivers in Los Angeles County, two from three drivers rely on rides as their chief source of income. One in 2 said it is their only occupation and three drive more than five days weekly. In addition, it shows that most drivers want reimbursement for car maintenance as well as access to worker's compensation and health insurance.
The legislation has been on the drivers' side.
In response, Uber and Lyft have cried foul, claiming that they're simply unable to abide by law. It might have a"devastating impact" in their companies, would induce them to increase fares and hire fewer people. They said they would suspend their operations rather than comply. Uber CEO Dara Khosrowshahi said that his firm can't employ all of its drivers in California. "We can not go out and employ 50,000 people immediately," he said in a meeting with the Pivot School podcast.
Except, of course, they had more than 24 hours. "Uber and Lyft had two freaking years to change their business practices, but they are acting like they're so shocked," explained Koonse.
"The companies have experienced years and multiple invitations to obey the law and grant employees the worker status and benefits they are legally owed," explained Edan Alva, a motorist and secretary with Gig Workers Rising, a collective of ride-hailing drivers and gig employees fighting for worker recognition and employee rights.
"In spite of multiple court rulings and a deadly pandemic, multimillionaire CEOs in Uber and Lyft are deciding to continue to violate the law," he explained in a statement. Alva added that shutting down operations at the center of a pandemic casts the firms in a much worse light. "Eliminating thousands of motorists' income during a pandemic to prevent following labor law is cruel."
Khosrowshahi did develop a potential solution, which calls on authorities to make a third kind of classification for gig employees. "[Each] time a business provides additional advantages to independent workers, the independent they become." He said that"we need new legislation" and they could not act on their own. He also proposed a general benefits fund that employees can draw for certain items like paid time off or health care, while still preserving their independence.
But coming up with this proposal now, almost a year after the passing of AB5, is really far too late. And as Koonse points outside, Uber might have implemented such a benefits fund on their own without government aid. "I really don't understand why they're not yet providing these advantages," she said. "I really don't know why they haven't already categorized people as workers. They had two decades. They should already be supplying benefits as required under the Affordable Care Act. Period."
Another option which Uber and Lyft floated would be to employ a franchise-like version, where they would permit their manufacturers to operators of vehicle fleets in California so that they would not be completely responsible for hiring employees or paying benefits. However, that is not entirely the case . "That's not going to get them out of liability in California," explained Koonse. "In California, the franchisor is liable for wage and hour law just as far as the franchisee. We have very strong joint liability and joint employer legislation here."
Rather than complying with the legislation, Uber and Lyft have decided to partner with DoorDash to increase almost $100 million to finance Proposition 22, a ballot initiative which could essentially roll back AB5 and permanently classify ride-hailing drivers as independent contractors. In reaction to the temporary reprieve yesterday, Lyft sent the following statement in support of this:
"While we won't have to suspend operations tonight, we do need to continue fighting for liberty plus benefits for motorists. That is the solution on the ballot in November, and it is the alternative motorists want since it preserves their capacity to make and to use the stage as they do today -- whenever they need -- while also getting historic new benefits. With no 80-90% of Californians who make on app-based platforms will reduce that opportunity." According to Koonse, Proposition 22 would walk back the ABC test mentioned earlier so that they would not have to provide minimum wage in addition to proper benefits.
"They would not have to provide all of these tough rights that workers are eligible for," she said. "It'll even amend the state Constitution to allow it to be such that the legislature and local governments can't undo it. It is super creepy"
Alva of Gig Workers Rising believes that by threatening to shut down, companies are trying to frighten politicians and employees into voting for Proposition 22. He said in a statement:
"The shutdown is an attempt to scare politicians from regulating violent companies and scare workers and other voters into supporting the companies' undemocratic ballot initiative, Prop 22. This childish behaviour is unacceptable and we need that Uber and Lyft comply with the law and grant workers the employee status and benefits we're owed. Doing this will save lives during this pandemic. We also request that voters vote on Prop 22, which has been completely funded by gig companies hoping to overthrow their exploitation of workers"
Meanwhile, in case Uber and Lyft aren't able to appeal their case in court, they will be back to square one. John Cote, a spokesman for the San Francisco city attorney, told the New York Times:"These companies may have bought themselves a little more time, but the cost is they need to demonstrate -- under oath -- which they've got an implementation plan which complies with the legislation [...] The court of appeal is still calling Uber and Lyft's bluff."
As for Uber and Lyft's claim that it just isn't possible to function in California without independent builders, Koonse said that, yes, they would probably have to increase prices and change the way they operate, but that is part of their obligation. "It's on them to figure it out."