California Ride-share Gig Companies Facing Takeover by Labor Unions

Three major Gig companies, Uber, Lyft and Doordash promised Thursday to take the fight to unionize their independent contractor drivers to voters, by committing $60 million to fund a California ballot initiative in 2020, unless lawmakers allow independent contracting employment for more than 300,000 drivers and delivery workers in the state.

The Service Employees International Union is pushing a separate ride-share driver bill to organize drivers, ignoring the April decision by the National Labor Relations Board and the US Department of Labor  determining that that Uber drivers are independent contractors.

Seeking more union members, California’s labor unions are attacking Rideshare companies for their use of independent contractor drivers.

In 2018, the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court of Los Angeles dealt a blow to independent contractors. The Court ruled that the Dynamex delivery drivers were employees, rejecting its own prior test for determining whether workers should be classified as either employees or independent contractors,” Forbes reported.

According to many legal analysts, what the Court did was legislate from the bench by adopting a new rule for the narrow purpose of interpreting California’s Industrial Welfare Commission’s wage orders.

The Court provided guidelines, known as the “ABC” test, to determine whether workers should be considered as employees or independent contractors.

The Legislature immediately jumped on the opportunity with several pieces of legislation to classify Uber and Lyft Rideshare drivers as employees, while claiming to be pro-worker and pro-employee.

Assembly Bill 5  by former labor union leader Assemblywoman Lorena Gonzalez (D-San Diego) is the most aggressive of the proposed bills to classify Rideshare drivers as employees rather than as independent contractors. AB 5 seeks to legislate the Dynamex decision and ABC test into state law, protecting it from being overturned by another court.

Billionaires who say they can’t pay minimum wages to their workers say they will spend tens of millions to avoid labor laws. Just pay your damn workers! https://t.co/PtyP4JZ7W0

— Lorena (@LorenaSGonzalez) August 29, 2019

A new study shows how changing the status of Lyft workers from independent contractors to employees could affect the number of drivers who work on the platform. In particular, the study considers how the number of drivers on the platform changes according to different work schedule and cost increase scenarios.

The study finds that increases in the cost of providing the service coupled with the introduction of formal work schedule arrangements, would likely lead to considerably fewer drivers working on the platform. Lyft would require as many as 300,673 fewer drivers in California under certain, plausible scenarios.

Gonzalez’s husband, former Assemblyman Nathan Fletcher, who left the Republican Party to become Independent and then switched again to the Democrats said, “People who put in an honest days work, deserve fair pay, resources and the protections to help them provide for their families. #AB5 will put a stop to the misclassifying of hard working Californians” as if Uber and Lyft drivers aren’t paid for their hours driving. 

People who put in an honest days work, deserve fair pay, resources and the protections to help them provide for their families. #AB5 will put a stop to the misclassifying of hard working Californians. We were proud to stand with @LorenaAD80, labor and others on this issue. pic.twitter.com/UKcr3cznZ1

— Supervisor Nathan Fletcher (@SupFletcher) August 29, 2019

According to the Dynamex ABC test, a worker will be considered an employee unless:

A) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

B) the worker performs work that is outside the usual course of the hiring entity’s business.

C) the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

The report by Beacon Economics includes the number of drivers who would be out of work in each Senate and Assembly district:

• 6,461 rideshare drivers out of work in AD 80 (Assemblymember Lorena Gonzalez-Fletcher, author of AB 5)

• 5,120 rideshare drivers out of work in AD 63 (Speaker Anthony Rendon)

• 9,751 rideshare drivers out of work in SD 39 (Senate President Pro Tem Toni Atkins)

• 12,159 rideshare drivers out of work in SD 18 (Senate Majority Leader Bob Hertzberg)

• 4,180 rideshare drivers out of work in AD 57 (Assembly Majority Floor Leader Ian Calderon)

AB 5 will be voted on by the Senate Appropriations Committee Friday, August 30.