It would be difficult to name an issue of more fundamental, far-reaching importance than how we earn our livings — and a titanic political battle is about to erupt.
In October, a coalition of companies that use on-call drivers with their own vehicles to transport passengers and goods — Uber and Lyft most famously — filed an initiative ballot measure to overturn a new, union-supported law that would compel their workers to become payroll employees.
That law, Assembly Bill 5, signed by Gov. Gavin Newsom just a few weeks ago, was easily one of the most controversial of the 2019 legislative session, implementing the state Supreme Court’s Dynamex decision handed down in 2018.
That decision created a three-factor “ABC test” to determine who could be an independent contractor and who must be considered an employee, thus striking at the heart of the business models Uber, Lyft and other companies use.
AB 5 lodged the ABC test into law, while granting exceptions to “licensed insurance agents, certain licensed health care professionals, registered securities broker-dealers or investment advisers, direct sales salespersons, real estate licensees, commercial fishermen, workers providing licensed barber or cosmetology services…” The gig companies contend that the Dynamex ruling and AB 5 undercut the desires of their drivers for flexibility. They offered to create a hybrid model under which drivers would still set their own hours but with income guarantees, fringe benefits and other aspects of payroll employment.
Unions countered with “wedriveprogress.org,” a coalition of drivers who want to become employees, and argued that the “misclassification” of workers as contractors is rampant, depriving them of rights and benefits protected by state labor laws.
Rebuffed by the Legislature and Newsom, Uber, Lyft and DoorDash, a delivery service for restaurant orders and other consumer items, pledged $30 million each to overturn the new law. Their initiative would embrace the hybrid employment concept they proposed in the Legislature, including minimum income guarantees, health care insurance subsidies and vehicle maintenance stipends.
The sponsors rolled out their measure Tuesday during a Sacramento press conference featuring drivers who like the status quo. One, Jermaine Brown, told reporters he quit a full-time job to drive for Uber and Lyft because he wanted “flexibility to be home with my kids” and called the new proposal “the best of both worlds.”
The California Labor Federation immediately denounced the proposal as “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,” and added, “California’s unions will join drivers who want fair wages, better treatment and flexibility to defeat this corporate ploy.”
However, it’s not certain that voters will have the last word because Brandon Castillo, a spokesman for the “Protect Drivers and Services” coalition, made it clear during the news conference that the firms “prefer a legislative path.”
In other words, they would drop the measure, even after spending heavily to qualify it for the November 2020 ballot, if the Legislature and Newsom would agree to a compromise. Otherwise, he said, “we’re going to spend what it takes to win.”
Although the proposal would apply only to drivers using “app-based rideshare and delivery platforms,” its adoption would create a new model that could spread to other industries.
Thus, the stakes, in both human and economic terms, are obviously immense. The “gig worker” model has been growing fast, particularly in California, and the state’s unions, whose membership is declining, are eager to have more payroll workers that they could potentially organize.
CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more stories by Dan Walters, go to calmatters.org/commentary.
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