Tech companies, drivers and regulators are scrambling to grapple with a new law in California that will require “gig economy” companies to offer their workers a full range of employee benefits.
There are a number of lingering questions about the controversial legislation, which California Gov. Gavin Newsom (D) signed into law last week — including what it will look like by the time it’s implemented.
Newsom has already vowed to seek changes that carve out a middle ground between the labor organizers behind the push and companies like Uber and Lyft, which are planning to funnel millions of dollars into a ballot measure intended to overturn the law.
“I will convene leaders from the Legislature, the labor movement and the business community to support innovation and a more inclusive economy by stepping in where the federal government has fallen short,” Newsom wrote in a signing statement last week.
But no matter where the state-level debate winds up, labor advocates and industry watchers say the law — dubbed Assembly Bill 5, or A.B. 5 — is a game-changer when it comes to regulating how gig economy companies are allowed to treat their workers. And if other states adopt California’s approach, companies like Uber, Lyft and DoorDash will find it harder to move forward with the same business model.
“California is setting an example for the nation on the future of the gig economy,” Alex Rosenblat, a researcher focused on the future of work with the Data and Society Research Institute, told The Hill.
For years, app-based service providers like DoorDash and Uber have avoided providing full benefits to employees by designating them as independent contractors.
But under the California law, most gig economy workers in the state will be classified as employees, allowing them to access benefits like a minimum wage and labor protections, including the right to organize.
Organize is exactly what they intend to do. Nicole Moore, an organizer with Rideshare Drivers United — the largest rideshare organization in California — told The Hill that thousands of drivers are set to band together to negotiate their rights with companies like Lyft and Uber.
“A.B. 5 is an incredible beginning to getting [the gig economy] under control, and it’s principled unions, brave politicians and, frankly, drivers who were able to get this law passed,” Moore said. “Now, because the companies have said they’re not even going to follow the law, it’s become our job … to force them to follow the law. And we’re preparing to do that.”
“We’re building our union right now,” she said.
Uber and Lyft have made it clear that they believe the California law is an existential threat to their business. Analysts have estimated the legislation could raise expenses for the companies by as much as 15 to 20 percent, and Uber has said outright that it will not classify its drivers as employees, flouting the law explicitly written for them.
“Because we continue to believe drivers are properly classified as independent … drivers will not be automatically reclassified as employees, even after January of next year,” when the bill would go into effect, Uber chief legal officer Tony West said in a statement.
Lyft has not come out as strongly in public, but it has threatened to “take the issue to the voters of California” through a ballot initiative that would overturn the law.
DoorDash, Uber and Lyft have committed to spending $30 million each to promote the ballot initiative.
In negotiations over the past several months, the companies have been floating an “alternative to A.B. 5” that would include a $21-per-booked-hour minimum wage and a benefits fund, but that proposal has so far failed to gain traction among critics of the companies.
“Why would we bargain away our employee rights?” Moore said in response to the plan.
The law empowers city officials to sue any violating companies for failing to properly reclassify their workers. Experts said court will likely be the venue for the fight over the gig economy, particularly in California, where Uber and others are setting themselves up for a barrage of lawsuits.
But more broadly, the widely watched battle over AB5 will likely spark a sea change in how various states, and potentially even the federal government, take on the gig economy’s fast-and-loose relationship with labor laws.
“As a society, we’ve agreed there’s a minimum set of labor standards that we need to meet,” Ken Jacobs, chairman of the University of California, Berkley Labor Center, told The Hill. “I think where we are right now, the gig companies are going to learn how to operate in that world.”
A coalition of labor groups in New York is campaigning to pass similar legislation at the state level, calling on the legislature and governor to protect New York’s gig economy workers.
“There’s a really strong coalition that’s forming,” Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, told The Hill. Her group represents yellow cabs as well as ride-hailing drivers, totaling around 22,000 members, she said.
She said they plan to ramp up their work lobbying lawmakers when the New York State Legislature is back in session in January.
“A.B. 5 has been so energizing and has given a lot of us tremendous hope,” Desai said. “Particularly companies like Uber and Lyft … lobbied hard to have themselves be exempt from [taxi] industry regulation. What we’re saying is they should not be similarly carved out of labor law.”
There are similar efforts underway in Washington state. And in New Jersey, where there is already a broad independent contractor law on the books, activists are anticipating gig workers and labor unions will bring more lawsuits to test whether the law is being properly enforced.
For years, labor activists have been raising concerns that gig economy companies have been allowed to flout decades of carefully honed labor laws by classifying workers as independent contractors. Now that argument is gaining steam amid a larger “techlash” by the public, concerned that the country’s most important technology companies have too much power over the way we live.
“The interesting thing about the gig economy is that it brings together so many stakeholders,” Rosenblat said. “The battle over Uber ends up becoming this framing device for a wide variety of battles.” Laws that take on how to classify workers will affect those in a broad range of industries — including truck drivers, nail salon workers, janitorial staff and more.
Jacobs said the efforts do not have to kill companies like Uber and Lyft, but they’ll likely have to reorient their business models over the next few years.
“Where there are businesses that cannot operate and meet any kind of minimum labor standards, then they will not continue,” he said.
“They’re going to have to change the way they do business,” Jacobs said. “Ultimately, the gig is up.”
Adams Clinical removes hurdle to clinical trial participation
How Adams Clinical increased retention and streamlined operations by switching to Uber.
One of the hardest parts of conducting a clinical trial is identifying willing participants. Once a participant is identified, strict qualifications and an often-lengthy time commitment limits who can participate, and a lack of access to transportation can make it difficult for participants to commit to and complete the study. To help improve recruitment and retention rates, Adams Clinical offered taxi rides to their participants. However, this solution became a burden on operational efficiency since taxis were only accessible to participants who lived close by and required the staff to pay at the end of each ride.
Finding the perfect transportation solution with Uber Health
To expand their transportation offering, Adams Clinical became an early beta partner with Uber in 2016. The team started using Uber’s web dashboard to arrange and pay for rides for participants with just a few clicks. Over the three years of this partnership, the switch to Uber Health simplified operational management, while reducing time spent on recruitment with increased retention rates. The easy-to-use Uber Health dashboard tracked all the rides and processed payments from one centralized interface, allowing the staff to arrange rides without the hassle of paying at the end of each trip. This flexibility, plus the extensive reach of Uber driver-partners in the Boston area, provided Adams Clinical with the transportation solution needed to successfully manage their participants in need of rides—which removed the headache from recruiting and retaining their study participants.
The result: Improved retention rates, simplified financial records, and an overall lift in team morale
By teaming with Uber Health, Adams Clinical enjoys a number of key benefits including:
• Expanded Recruitment—Using Uber Health cut down the length of enrollment by providing a larger pool to recruit from, resulting in a 5 to 10 percent reduction in recruitment time over the last two years.
• Centralized Billing—All rides are charged to one company credit card, which is then processed at the end of each month to streamline the amount of administrative effort required.
• Reliable Service—Each ride is tracked in the dashboard so the team knows when the participant will be arriving to help keep the rest of the study on schedule.
• Improved Retention—In the first two years of the partnership with Uber, Adams Clinical estimated up to 20 percent fewer people dropped out of a trial when transportation was arranged to and from the clinic.
• Financial Accountability—Details for each ride are available in the dashboard, and can be downloaded to a spreadsheet, offering convenient management with trial-specific reporting per participant.
• Easy to Use—Using Uber Health has been easy for both staff and participants, even among populations without smartphones or passengers new to Uber.
by Kendall Brown
Get a discounted lift to the polls on Election Day
By Jonathan Sperling
No MetroCard? No excuse to stay home on Election Day.
Ride-sharing giant Lyft is getting in on Get Out the Vote efforts by offering discounted rides to polling locations in New York City on Election Day.
Use code VOTENYC19 between 4:00 a.m. and 11:00 p.m. on Election Day to receive 50 percent off the price of a Lyft ride, up to $5. The deal is inspired by the fact that more than 15 million registered voters didn’t vote in 2016 because of transportation issues.
“At Lyft, we’re working to improve lives by connecting people and their communities through the world’s best transportation. This Election Day, we want to help make it easier for people in New York City to get to the polls,” said Lyft’s Director of Public Policy Jen Hensley. “Every voice is important, and we’re excited to help make them heard in this year’s elections.”
Uber, Lyft, and DoorDash kick off $90 million fight against California’s gig worker law
Under the ballot measure, drivers could get earnings guarantee of 120 percent of minimum wage
A group of drivers and couriers for Uber, Lyft, and DoorDash launched a new group called Protect App-Based Drivers and Services, which is aimed at passing a ballot initiative in California to counteract the effects of the state’s recently passed gig worker bill. The effort is being supported by the companies, which have vowed to spend $90 million to get the measure passed in 2020.
Assembly Bill 5, which was signed into law by California Gov. Gavin Newsom (D) on September 18th, enshrines the so-called “ABC test” for determining whether someone is a contractor or employee. Legal experts agree the law will make it more difficult for gig economy companies like Uber, Lyft, and DoorDash to classify their drivers and couriers as independent contractors. And the companies have argued that the law represents an existential threat to their business models.
As such, the companies were preparing this contingency plan even before Newsom signed the bill into law. On August 29th, The New York Times reported that Uber, Lyft, and DoorDash would spend $90 million ($30 million each) to pass a ballot initiative that would essentially exempt them from the law. (InstaCart is also involved, but it hasn’t committed to spend any money to support its passage.) The hope was that after striking out with lawmakers and labor groups, the companies could win a reprieve by appealing directly to voters.
The ballot measure would ask voters to approve the following:
- At least 120 percent of the minimum wage
- $0.30 per mile for expenses such as gas and vehicle wear-and-tear
- Health care subsidies consistent with employer contributions under the Affordable Care Act for drivers who work 15 hours a week or more
- Occupational accident insurance to cover on-the-job injuries
- Automobile accident and liability insurance
- Protection against discrimination and sexual harassment
- Recurring background checks of drivers
- Mandatory safety training of drivers
- Zero tolerance for alcohol and drug offenses
- A cap on driver hours per day to prevent sleepy driving
It’s a new spin on the failed proposal that Uber and Lyft presented to state officials as a compromise to prevent the passage of AB5. The companies had promised to pay their drivers $21 an hour (but only while on a trip), provide them with sick leave, and “empower” them to “have a collective voice” — a nod toward drivers forming a union.
After AB5 passed, though, Uber and Lyft warned that drivers could lose their flexibility to drive when they wanted. “Drivers would not be able to choose when to sign on anytime they want it,” Tony West, Uber’s general counsel, said in September. “They would work in shifts like every other employee works in shifts.” Experts have said there is nothing in federal or state law that precludes Uber from offering its drivers the same flexibility as employees as they have now as contractors.
(West also claimed that Uber could ultimately pass the ABC test because “drivers’ work is outside the usual course of Uber’s business.”)
The ballot measure is a risky — and costly — move for Uber and Lyft, insofar as it could further antagonize labor unions that have been hugely influential over the passage of AB5. Unions championed the bill throughout the legislative process, and have been at the center of the fight over gig work in California.
“This measure is another brazen attempt by some of the richest corporations in California to avoid playing by the same rules as all other law-abiding companies in our state,” Art Pulaski, executive secretary-treasurer of the California Labor Federation, said in a statement. “California’s unions will join drivers who want fair wages, better treatment and flexibility to defeat this corporate ploy.”
Meanwhile, union-backed groups and other supporters of AB5 are planning to protest outside the homes of key Uber investors, including Uber board member and Benchmark Capital partner Bill Gurley.
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