Read on Twitter
Uber, Lyft, Instacart, Postmates, and DoorDash have put about $180 million – & a slew of in-app messages – behind their push for California Prop. 22, one of the most nationally consequential things on any ballot this year. Here’s some context on how we got here & what's at stake
In April 2018, CA's supreme court issued a sweeping ruling, Dynamex, establishing that if workers aren't doing “work that is outside the usual course” of a firm’s business, then under CA wage law they're employees entitled to protections, not contractors https://www.bloomberg.com/news/articles/2018-05-09/democrats-take-aim-at-the-gig-economy
This “ABC test” ruling spurred alarm among all sorts of companies, including tech platforms whose core business model is providing services via an army of workers who they claim are contractors, but whose work is arguably very much within "the usual course" of the firm's business
Federal or state laws guarantee a slew of protections to employees but not to independent contractors, including minimum wage, overtime, breaks, sexual harassment protection, unemployment, worker's compensation, non-discrimination & union organizing rights https://www.bloomberg.com/news/articles/2014-10-16/fedex-ground-says-its-drivers-arent-employees-dot-the-courts-will-decide
Having employees brings costs & liabilities for companies that don't apply w/ contractors. Uber has said making drivers employees “would require us to fundamentally change our business model" & have "adverse effect on our business and financial condition.” https://www.bloomberg.com/news/articles/2019-04-12/uber-ipo-filing-warns-that-drivers-will-be-even-less-happy
Under state and federal laws, whether workers are contractors or employees depends on a range of often-contested factors including how much control a boss exerts over the work. Someone may be an employee under one law, but not under another https://www.bloomberg.com/news/articles/2017-01-10/it-s-a-new-game-for-uber-drivers-if-new-york-passes-this-law
Among the types of workers whose bosses have claimed they're contractors: drivers, cooks, teachers, mixed martial artists, video game developers, house cleaners, cable installers, strippers, lacrosse officiators... https://www.bloomberg.com/news/features/2020-05-08/as-ufc-pushes-may-mma-event-fighters-say-deals-are-getting-worse
While classifying their drivers as contractors, Uber and Lyft have also argued to city officials that those drivers’ names should be treated as “trade secrets” and not released, because publicizing them would make it easier for competitors to hire them https://www.bloomberg.com/news/articles/2019-09-03/uber-argues-driver-names-are-closely-guarded-trade-secrets
In 2019, dozens of workers classified by Instacart as contractors told me the work is less flexible than advertised, with tactics like four minutes of pinging noise (with an ACCEPT button but no reject button) used to prod them to take on unappealing tasks https://www.bloomberg.com/news/articles/2019-07-15/instacart-hounds-workers-to-take-jobs-that-aren-t-worth-it
In summer 2018, I reported firms including Uber, Lyft, Instacart & Doordash were quietly lobbying California's top Democrats for swift legislation or executive action to shield them from Dynamex ruling, which they said would otherwise “decimate businesses” https://www.bloomberg.com/news/articles/2018-08-05/gig-firms-ask-california-dems-to-rescue-them-from-court-ruling
Unable to secure relief from elected Democrats on their own, gig companies tried in 2019 to secure a deal with unions that would let them keep classifying workers as contractors while providing them new perks like benefit funds or guilds https://www.bloomberg.com/news/articles/2019-01-16/uber-has-bigger-problems-to-worry-about-than-the-d-c-shutdown
In late 2018, SEIU Cali privately circulated a memo saying that the ABC test could create a path for “potentially the entire gig sector” to organize, but that there were major drawbacks, including that the governor, state referendum process or Congress could subvert such efforts
In January 2019 I reported firms like Uber and Lyft were meeting with unions like the Teamsters and SEIU to discuss potential compromises, and California's new Governor Gavin Newsom was urging them to reach a deal https://www.bloomberg.com/news/articles/2019-01-16/uber-has-bigger-problems-to-worry-about-than-the-d-c-shutdown @BW
Uber had previously forged a deal to create a Uber-funded, union-affiliated guild for New York drivers that's prohibited from striking or challenging designation of drivers as contractors, but can contest deactivations and lobby for changes like wage floor https://www.bloomberg.com/news/articles/2016-10-27/uber-found-an-unlikely-friend-in-organized-labor
New York City now guarantees app-based drivers a minimum wage meant to be over $17 an hour after expenses https://www.bloomberg.com/news/articles/2019-01-30/juno-sues-to-block-minimum-pay-rule-for-ride-share-drivers
1 proposal circulated privately in 2019 by SEIU CA council would’ve created systems for bargaining, “portable benefits” accounts & pay guarantees but allowed companies to seek “flexible alternative standards” in areas like overtime, breaks & worker’s comp https://www.bloomberg.com/news/articles/2019-07-25/union-splits-from-uber-and-lyft-on-california-worker-rights-law
Among those advising & representing Uber in its dealings with organized labor, I reported in 2019, was Laphonza Butler, a former SEIU local president who was also advising Kamala Harris as she ran for president https://www.bloomberg.com/news/articles/2019-07-25/union-splits-from-uber-and-lyft-on-california-worker-rights-law
In May 2019, California’s state assembly passed A.B. 5, a bill that, while exempting certain sectors, would codify the 2018 Dynamex ruling’s broad definition of an employee and apply it to a wider swathe of state laws. Gig companies didn’t get an exemption https://www.bloomberg.com/news/articles/2019-06-12/uber-lyft-executives-urge-california-compromise-on-driver-pay
In June 2019, Uber & Lyft went public with their vision for deal: Drivers would be considered contractors, not employees, but would get wage standards for the time when they're picking up or dropping off passengers, a benefits fund, and an association https://www.bloomberg.com/news/articles/2019-06-12/uber-lyft-executives-urge-california-compromise-on-driver-pay
Union leaders denounced Uber and Lyft’s public proposal, and some - like the state building trades council - went further, warning more generally that cutting a deal with the gig companies would risk undermining labor standards across the board https://www.bloomberg.com/news/articles/2019-06-12/uber-lyft-executives-urge-california-compromise-on-driver-pay
By July 2019, dealmaking efforts hit a pivotal setback: The Teamsters signed onto a letter to Gov Newsom & lawmakers, organized by the building trades, opposing proposals to create a 3rd category of worker or let tech platforms treat workers as contractors https://www.bloomberg.com/news/articles/2019-07-25/union-splits-from-uber-and-lyft-on-california-worker-rights-law
SEIU California State Council's President said it “has not and would not support any third classification or interpretation of employee classification that would undermine employee status and protections” granted by Dynamex ruling and the A.B. 5 bill https://www.bloomberg.com/news/articles/2019-07-25/union-splits-from-uber-and-lyft-on-california-worker-rights-law
In August 2019, AB 5 was endorsed by Bernie Sanders, Kamala Harris & Elizabeth Warren. The Massachusetts senator wrote an op-ed opposing "exclusions," saying "All Democrats need to stand up & say, without hedging, that we support AB 5 & back full employee status for gig workers”
Uber, Lyft, and DoorDash, while continuing to push for a deal, announced in August 2019 they were committing $90 million in case they had to instead resort to a ballot measure ensuring drivers aren't considered employees https://www.bloomberg.com/news/articles/2019-08-29/uber-lyft-pledge-60-million-to-possible-labor-law-ballot-fight
With no compromise in sight, in September 2019 California’s senate passed AB 5 and Gov. Newsom signed it, while signaling he was still aiming for future legislation providing gig drivers “voice at work” and “preserving flexibility and innovation” https://www.bloomberg.com/news/articles/2019-09-11/california-senate-passes-labor-bill-set-to-transform-gig-economy
Gig companies unsuccessfully sued to try to block enforcement of AB 5, while meanwhile arguing their workers were not employees even under the new law’s more expansive definition. Uber made changes to its app aiming to boost its case. https://www.bloomberg.com/news/articles/2019-09-18/california-governor-signs-labor-law-setting-up-bitter-gig-economy-fight
Lyft’s president continued meeting labor leaders to push for a deal https://www.bloomberg.com/news/articles/2020-02-07/uber-urges-court-to-smother-california-frankenstein-labor-law
In May 2020, with the big gig companies still refusing to reclassify workers as employees, California’s attorney general and several cities sued Uber and Lyft under AB 5. https://www.bloomberg.com/news/articles/2020-05-05/uber-lyft-sued-by-california-officials-over-driver-benefits
In August, when a judge granted an injunction to force the companies to reclassify workers as employees, Uber and Lyft threatened to shut down California operations. An appeals court put the injunction on hold while considering the case.
(Back in Sacramento, following complaints about Dynamex and AB 5’s impact in areas like freelance journalism and language interpreting, the legislature passed, and in September 2020 the governor signed, a new compromise bill that loosens the rules in such sectors.)
Meanwhile the gig companies, unable to secure a deal of their own, forged ahead with their ballot measure, now called Prop 22, which qualified in the spring for the Nov. 3 ballot. https://voterguide.sos.ca.gov/propositions/22/ If it passes, lawmakers are blocked from amending it absent a 7/8 majority.
Prop 22 would shield the companies from AB 5 by designating app-based drivers as contractors exempt from California employment laws such as hourly minimum wage, while providing some alternative perks such as health contributions. https://vig.cdn.sos.ca.gov/2020/general/pdf/topl-prop22.pdf
How about unionization rights? Under U.S. law, private sector unionization rights are generally handled by the federal government; states are pre-empted from encroaching on that. So nothing in Dynamex or AB 5 or Prop 22 directly resolves whether Uber drivers can unionize. But…
The claim that drivers are currently excluded, as supposed contractors, from the scope of federal labor protection could theoretically serve as license for a state to legislate its own bargaining system for them, as has been done for example in agriculture https://www.bloomberg.com/graphics/2020-the-fleecing-of-the-american-worker/
In 2018 the 9th Circuit signaled antitrust law would likely doom a Seattle law (backed by labor, opposed by Uber) creating collective bargaining rights for rideshare staff– but that there's a path for a state to do something similar if it chose to. https://www.bloomberg.com/news/articles/2018-05-12/for-uber-lyft-drivers-seattle-loss-may-boost-unions-elsewhere
On other hand, if AB 5 stays in force for drivers & firms can be forced to classify them as employees under state law, the resulting business model changes could make it much easier to persuade federal officials that drivers are employees under federal law too, with union rights.
Under Trump, the National Labor Relations Board’s general counsel has held that app-based drivers aren’t employees and so aren’t protected. Depending on who wins the election, that could change.
So California’s gig work fight will be hugely impacted by the national one – and vice versa…
Adding an “ABC test” like California’s to federal labor law was proposed by Bernie Sanders and other senators days after the 2018 Dynamex ruling, and is part of the labor law reform that passed the Democratic U.S. House this year. https://www.bloomberg.com/news/articles/2018-05-09/democrats-take-aim-at-the-gig-economy https://www.bloomberg.com/graphics/2020-the-fleecing-of-the-american-worker
Joe Biden and Kamala Harris have weighed in against Prop 22, and Donald Trump's campaign has attacked them for supporting AB 5. Whatever happens with Prop 22 will have national shockwaves.
Obama’s former wage and hour chief has warned against creating carveouts for gig companies, saying to do so “risks undermining the entire system of employment protections that we’ve had in place for decades.” https://www.bloomberg.com/news/articles/2019-08-29/uber-lyft-pledge-60-million-to-possible-labor-law-ballot-fight
The gig companies are also lobbying on the national stage– Uber’s CEO in March urged Trump consider "‘3rd way’ that would update our labor laws to remove the forced choice between flexibility and protection for millions of American workers.” https://www.bloomberg.com/news/articles/2020-03-25/uber-lyft-called-out-in-hometown-for-flouting-workplace-law
More to come!
More to come!
Latest: Cali appeals court upholds order that Uber & Lyft must reclassify drivers as employees https://www.bloomberg.com/news/articles/2020-10-23/uber-lyft-ordered-by-appeals-court-to-comply-with-labor-law “the injunction was properly issued in accordance with enduring principles... It is broad in scope, no doubt, but so too is the scale of the alleged violations”
