Uber, Lyft say making drivers employees would ‘pose a risk to our businesses’

Uber and Lyft launched a public campaign Wednesday to pressure California lawmakers and Gov. Gavin Newsom into exempting them from pending legislation that would force them to classify drivers as employees.

The ride-hailing giants have lobbied behind the scenes for months, arguing that their drivers should retain “independent contractor” status — even as drivers in California and across the country have mounted protests over low pay and a lack of labor protections and filed thousands of lawsuits over their treatment.

“A change to the employment classification of ride-share drivers would pose a risk to our businesses,” the companies declared in an opinion article published in the San Francisco Chronicle Wednesday under the bylines of Uber chief executive Dara Khosrowshahi, Lyft chief executive Logan Green and Lyft president John Zimmer.

The companies’ stock prices have dropped since they went public this spring, as investors question whether they can ever make a profit.

In their op-ed, the executives suggested that rather than classifying drivers as employees they adopt “a system of worker-determined benefits — from paid time off to retirement planning to lifelong learning.”

The vaguely-worded proposal did not seem to offer what labor laws give employees: a guaranteed minimum wage, overtime pay, and benefits such as sick leave, family leave, workers’ compensation, disability and unemployment insurance.

And rather than allow drivers to unionize, which they could do if they are classified as employees, the companies suggested “forming a new driver association, in partnership with state lawmakers and labor groups, to represent drivers’ interests.”

A bill, AB 5, passed the California Assembly by a 59-15 vote last month to codify a 2018 California Supreme Court decision. That ruling requires classifying workers as employees if they perform work as part of a company’s “usual course” of business. It is expected to begin moving through the Senate next month.

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In a legislature and an administration dominated by Democrats, the bill pits two powerful constituencies that have often supported Democrats against each other — labor unions and technology companies. The bill is backed by the California Labor Federation. But the Chamber of Commerce has been organizing independent contractors to lobby against AB 5, and in the coming months, Uber and Lyft may step up efforts to enlist thousands of its drivers in the effort.

Assemblywoman Lorena Gonzalez (D-San Diego), AB 5’s author, called the Uber-Lyft op-ed “the same song and dance we’ve heard before. They know they are losing and are desperate to change the PR without offering any details that help workers.”

“They say they’re offering ‘retirement planning,’” she added, noting that the companies don’t have to pay into Medicare or Social Security for independent contractors. “What does that mean? They’re going to open up a ballroom and talk about their future?”

Gonzalez has amended AB 5 to exempt professional workers such as doctors, accountants, real estate agents, insurance agents and hair dressers “who make far more than minimum wage.” But she said “I’m not willing to bargain away decades of progress on wages and labor protections for Uber and Lyft. These are billion-dollar companies. They’ve done everything in their power to make outrageous profits for shareholders at the expense of workers.”

Classifying gig-economy workers as independent contractors means “taxpayers are on the hook for providing social services for employers who don’t do the right thing,” she said.

Gov. Gavin Newsom did not respond to a request for comment on reports that his office has been involved in negotiations over a compromise to AB 5. But in an interview with Politico Tuesday, he was quoted as saying “I am very encouraged by the conversations we’re having.”

“I don’t think it’s a binary question — ‘it’s this or that,’” he said. “I don’t want to stifle innovation. At the same time, I’m concerned, as everybody should be, about people running in place, working harder but not getting any of the commensurate benefits.”

The Uber-Lyft proposal was greeted with indignation by Los Angeles ride-hailing drivers who staged a strike last month seeking higher pay and benefits.

“The gig app industries are making bazillions for the few, while drivers starve,” said Nicole Moore, a Lyft driver and organizer with the 5,000-member Rideshare Drivers United. “They’ve implemented draconian pay cuts and now they want us to form company unions without giving us the right to bargain for a real contract. It’s a non-starter.”

In their op-ed, the ride-share executives estimated that, globally, drivers have earned $80 billion driving for Uber and Lyft. “They are attracted to the work because of the flexibility it affords,” they wrote. “Very few jobs allow you to start or stop working whenever, wherever, as often as you want.”

They also acknowledged that independent work is “associated with higher levels of stress. Ride-share drivers’ worries may concern earnings stability, protections on the job, and the ability to have a meaningful voice in the companies whose apps they use.”

The solution: “We can make independent work better if we update century-old employment laws… we have an opportunity to work with legislators and labor groups to find a different solution that preserves drivers’ ability to work independently if they choose to do so while improving the quality and security of their work.”

UC Berkeley labor law professor Catherine Fisk called the Uber-Lyft proposal for a drivers association “disingenuous,” noting that the companies are in court battling a Seattle ordinance to allow drivers to bargain collectively.

“Giving workers ‘more of a say in the decisions affecting their lives and livelihoods,’ as the companies propose, is easy: recognize the employees’ choice of union,” Fisk said.

By law, she said, workers classified as employees may work flexible hours and often do in such industries as retail, trucking and fast food. “One can be an employee working two hours a week or 60. There is absolutely no legal requirement that an employee be someone who works a fixed schedule.”

Fisk noted that one benefit of employee classification would be to shift the cost of maintaining vehicles which is now borne by drivers. “If a driver is working 50 hours a week for Uber, it makes sense that the vehicle should be paid for by Uber, which is profiting from its use,” she said.

If AB 5 fails to pass, or is vetoed by Gov. Newsom, Uber and Lyft, along with thousands of other companies, would still be subject to the standard for independent contractor classification set by the California Supreme Court. But applying it to companies one by one would require lawsuits, thus adding to the legal battles the companies are already waging.