Ride sharing companies are pushing back against California's Assembly Bill 5, a proposed piece of legislation that would require employers to treat independent contractors — like Lyft and Uber drivers — as regular employees.
The companies claim that AB-5, which is still winding its way through the Sacramento Statehouse, would jeopardize their business models and hurt workers by limiting the much-loved flexibility inherent in their jobs.
We want to "create a structure that both allows the continued flexibility and also provides baseline protections, benefits, and avenues for workers' voices," said Loni Mahanta, Lyft's vice president of policy development and research, in an interview Thursday. She added that AB-5 would not accomplish such goals.
In June, the CEOs of Uber ($UBER) and Lyft ($LYFT) penned an op-ed in the San Francisco Chronicle, arguing that a change to the employment classification of their drivers would "pose a risk" to their businesses. They ceded, however, that the "status quo can and should be improved."
Uber, which went public in May, also noted in filings with federal regulators that one risk to its business model was "legislation or judicial decisions" that would require drivers to be treated as employees. Such a change, the company said, would have a significant "adverse effect on our business and financial condition."
Yet lawmakers and several labor rights groups have come out in support of the bill. Securing solid employment status, they say, is essential for guaranteeing workers rights, such as workplace protections, insurance benefits, and paid sick leave, among others.
"There are a lot of laws that we have in place that companies right now are skirting by, saying their workers are independent contractors," California Assemblywoman Lorena Gonzalez told Cheddar last week.
Lyft and other peer-to-peer companies, however, say their opposition is not just out of concern for their bottom line. "What we hear from drivers, over and over again, is that the most important piece of what Lyft offers is the ability to work if, and when, they want," Mahanta said.
On the other hand, Gonzalez, who wrote and introduced AB-5 last December, said "flexibility is always in the hands of the employer … that is up to the company to allow that."
While the legislation is a state matter of significant importance to the many San Francisco-based companies, AB-5 has also received national attention — especially after receiving two major endorsements from Democratic 2020 hopefuls Sen. Bernie Sanders of Vermont and Sen. Elizabeth Warren of Massachusetts.
In an op-ed in the San Francisco Chronicle in May, Sanders said that because of the "independent contractor" classification, gig economy workers are "being denied basic workplace protections and a fighting chance to obtain higher wages," despite working full time.
Just last week, Warren threw her full support behind AB-5, writing in an op-ed in the Sacramento Bee that the gig economy's misclassification of workers fits into the centuries-old tradition "in which big, powerful entities exploit labor laws to boost their bottom lines."
Warren also countered against company-sponsored alternatives, saying such approaches "would do little but sow confusion and uncertainty by adding other, still undefined, classes of workers whose rights are unclear – and perhaps unenforceable."
Yet other opponents, such as the California Chamber of Commerce, said the bill would "undercut the innovation of a business model" that has spurred economic growth in the state.
AB-5 was passed overwhelmingly by the California State Assembly in May and is currently being debated in the state Senate. In a statement to Cheddar, a spokesperson for California Gov. Gavin Newsom said that "if and when this bill reaches the Governor's desk it will be evaluated on its merits."
"Some things are obvious. If you work for a company — you're doing the work of that company — you are an employee and you should benefit the same way every other employee does," Gonzalez added.