Rideshare Drivers Ruled To Be Employees by CPUC Under AB 5

On Thursday, the California Public Utilities Commission (CPUC) announced that all rideshare service drivers in California will now be considered employees under the AB 5 contract worker law.

CPUC decides against rideshare companies

All Transportation Network Companies (TNCs), which includes Uber and Lyft, are covered under the ruling and will have to continue to follow AB 5 and associated deadlines, such as the upcoming July 1st deadline for providing worker’s compensation.

“For now, TNC drivers are presumed to be employees and the Commission must ensure that TNCs comply with those requirements that are applicable to the employees of an entity subject to the Commission’s jurisdiction,” said CPUC Commissioner Genevieve Shiroma in a statement.

While this further validates AB 5, the law that changed the definition of what an independent worker is and what benefits they are entitled to as employees, rideshare companies noted that the ruling would only exacerbate current unemployment issues during the economic downturn, would hurt the majority of employees who want to have flexible, on-demand work, and overly ‘punished’ rideshare companies.

“Uber remains committed to expanded benefits and protections to drivers,” the company said in a statement. “If California regulators force rideshare companies to change their business model it would affect our ability to provide reliable and affordable services, along with threatening access to this essential work Californians depend on.”

Lyft gave a similar response on Thursday.

“CPUC’s presumption is flawed. Forcing them (drivers) to be employees will have horrible economic consequences for California at the worst possible time,” noted Lyft.

Rideshare companies try other methods against AB 5

Both California and rideshare companies are currently pursuing different avenues in both preserving and invalidating AB 5 respectively.

California, along with city attorneys from Los Angeles, San Diego, and San Francisco, are currently suing the rideshare companies over labor violations. California Attorney General Xavier Becerra has personally spearheaded the suit to have the companies fall in line with AB 5 and give worker protections.

“Californians who drive for Uber and Lyft lack basic worker protections—from paid sick leave to the right to overtime pay,” said Attorney General Becerra in a statement last month. “California has ground rules with rights and protections for workers and their employers. We intend to make sure that Uber and Lyft play by the rules.”

The office of the San Francisco City Attorney expanded on the reasoning.

“We have long maintained that Uber and Lyft are misclassifying and exploiting their drivers, and we intend to prove that in court,” Meiling Bedard, a spokesman for San Francisco City Attorney Dennis Herrera.”To the extent that the California Public Utilities Commission takes the position that Uber and Lyft drivers are employees, they join a long list of government entities and regulators that have consistently and correctly reached that same conclusion.”

At the same time, rideshare companies and delivery companies such as Postmates have come together on lawsuits over AB 5, as well as a November ballot initiative to give rideshare companies an AB 5 exemption.

“The ballot is their best hope,” explained legal strategist Jon Levy. “CPUC’s decision took the wind out of their sails on ll legal routes. They can still technically succeed, but it’s been shown that breaking down AB 5 piecemeal is much more successful. Since January, truckers and musicians have gotten exemptions, with journalists coming close and currently trying again.

With so many rideshare drivers against AB 5, it won’t take that much convincing to voters, not to mention how much the law has been loathed in California. Coronavirus rules might change some minds due to worker protections, but honestly, economic concerns will probably trump that later this year.”

The CPUC decision took effect immediately in California and is expected to stand until at least November, barring any further legal action.