It’s been a long road to regulation for Uber and Lyft in their home state of California, but it may be coming to an equitable end—one that would see their massive workforce of driver-contractors finally given legal employee status.
State AG Xavier Becerra, along with the Attorneys General of Los Angeles, San Francisco, and San Diego announced in a press release this afternoon their intention to file an injunction against the transportation companies to “immediately halt the unlawful misclassification of their drivers as independent contractors.” The injunction itself is expected to become public tomorrow, though it’s unclear if it will be granted.
“Misclassifying your workers as ‘consultants’ or ‘independent contractors’ simply means you want your workers or taxpayers to foot the bill for obligations you have as an employer,” Becerra wrote. “That’s not the way to do business in California. We’re seeking a court order to force Uber and Lyft to play by the rules.”
The rules, in this case, being the landmark Dynamex decision made by the state’s highest court over two year ago, as well as Assembly Bill 5, which entrenched that court ruling into state law. AB5 passed last September and came into effect on January 1, but gig economy companies such as Lyft and Uber have thus far flaunted the new restrictions.
Becerra correctly identifies the only major innovation of so-called “transportation network companies” (TNCs) as being their business model: one that makes drivers responsible for the sorts of expenses an employer normally takes on (insurance, healthcare, gas, vehicle wear, etc.) while relieving these same companies of basic obligations like minimum wage and overtime pay. That Becerra even needed to go this far says a great deal about the sorts of people running TNCs. “Today’s action by the Attorney General is another strong signal to voters that these companies will do anything, including breaking the law—in order to boost their profits,” Bob Schoonover, president of SEIU California, wrote in a statement to press.
“They take the value of labor from those workers, they make it into their own profit. And those workers are at higher risk and are poorer as a result,” Edan Alva, a Lyft driver, told Gizmodo. “It’s no different than any other theft.”
Alva was among the drivers who submitted testimony in the lawsuit filed by this same group of AGs last month. Starting as a part-time driver six year ago, Alva tried to make Lyft his primary source of income after losing his full-time job two years ago. It was at that time Alva said he realized “exactly how unrealistic and how predatory this business model is.” While the myriad associated costs and inconsistent income made it difficult for him to determine hourly compensation of driving on Lyft full-time, Alva told Gizmodo that his earnings were “significantly below minimum wage.”
Earlier in the day, Alva and an estimated 100 other rideshare drivers protested outside the home of Uber CEO Dara Khosrowshahi bearing, among other signs, a banner reading “A THIEF LIVES HERE.” Uber and many other ridesharing companies have invested millions in a ballot measure to overturn AB5 as well as interest groups meant to convince drivers that their “independence” is valuable. (Obviously, it is, though the value tends to flow upward.)
“We believe the courts should let the voters decide. Trying to force drivers to give up their independence 100 days before the election threatens to put a million more people out of work at the worst possible time,” Lyft told Gizmodo in an email. “The California Legislature passed a law that was so badly drafted it destroyed thousands of jobs before the ink was dry. If the courts were to grant the Attorney General’s request, it would have a devastating effect on millions of Californians at the worst possible time. Our ballot measure fixes the Legislature’s mistake, protects millions of Califorrnians (sic) who rely on rideshare and on-demand delivery services, independent contractors and small businesses struggling to get through COVID. Our ballot measure has strong support among voters, drivers and millions of customers and we believe the voters should be allowed to decide this issue in November.”
Uber similarly, but more succinctly, stated that “the vast majority of drivers want to work independently,” though the company has not yet provided Gizmodo with any data to back up that claim. “We’ve already made significant changes to our app to ensure that remains the case under California law. When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry.”
We will include the text of the injunction once it becomes available.