Uber gained’t be reclassifying its drivers from impartial contractors to workers in mild of a brand new invoice that handed in California, largely as a result of the invoice doesn’t particularly require them to take action, the corporate’s chief authorized official argued Tuesday.
“Contrary to some of the rhetoric we’ve heard, AB5 does not automatically reclassify any ride-share drivers from independent contractors to employees,” Tony West, chief authorized counsel at Uber, mentioned in a press name with reporters. “AB5 does not provide drivers with benefits. AB5 does not give drivers the right to organize. In fact, the bill currently says nothing about ride-share drivers.”
The invoice in query, Meeting Invoice 5 (AB5), codifies a current California Supreme Court docket ruling that makes it a lot tougher for corporations like Uber to categorise its drivers as impartial contractors. It enshrines the so-called “ABC test” for figuring out whether or not somebody is a contractor or worker. Some type of an ABC take a look at is already regulation in lots of states, together with Massachusetts, Virginia, and New Jersey.
West mentioned Uber may cross the ABC take a look at as a result of drivers aren’t core to its enterprise. “Under that three-part test, arguably the highest bar is that a company must prove that contractors are doing work ‘outside the usual course’ of its business,” West mentioned. ”A number of earlier rulings have discovered that drivers’ work is exterior the same old course of Uber’s enterprise, which is serving as a know-how platform for a number of various kinds of digital marketplaces.”
West is right in saying the invoice doesn’t routinely flip each Uber driver into an worker. A lot of that work will happen behind the scenes in California’s regulatory businesses the place unemployment insurance coverage claims, staff compensation claims, and different particular person exams are introduced.
However the argument that its drivers “operate outside the usual course of Uber’s business” is certain elevate a number of eyebrows. West mentioned Uber intends to observe AB5 ought to it’s put into regulation subsequent yr, however that it’ll proceed to attempt to show that it doesn’t fall below its authorized framework.
AB5 additionally exposes Uber to extra lawsuits from metropolis and state prosecutors. The invoice contains an modification that empowers the state’s legal professional common and any district legal professional “of a city having a population in excess of 750,000” to file for injunctive reduction if Uber is discovered to be violating its provisions. (San Francisco’s inhabitants is roughly 750,000.)
San Francisco District Lawyer Dennis Herrera seems to be fascinated about such a job. “The state doesn’t necessarily have the resources to handle every case,” he mentioned in a press release, in accordance with the San Francisco Examiner. “City attorneys, district attorneys and other local prosecutors are a force multiplier when it comes to protecting workers and consumers. It makes sense to have effective enforcement. You do that by providing local prosecutors with the legal tools to do the job.”
Requested whether or not the corporate may afford a possible tidal wave of lawsuits, West was circumspect. “Uber is no stranger to legal battles,” he mentioned. “I think that’s one reason I have my job.” In different phrases, Uber is so used to being sued, it’s not clear that AB5 presents any distinctive challenges in that respect.
West claimed that Uber “never lobbied” in opposition to AB5. The corporate has met with a number of stakeholders, together with Governor Gavin Newsom, state lawmakers, and labor unions representing drivers. The corporate’s proposal to ascertain a $21-an-hour, on-trip minimal wage for drivers, paid day off, and compensation for drivers injured on the job was rejected by lawmakers earlier than the passage of the invoice.
Now the corporate is planning on dumping $60 million, together with Lyft, right into a marketing campaign account to advocate for a poll initiative in 2020 to ask voters to help the creation of a brand new classification for ride-share drivers — successfully sidestepping the thorny mess that AB5 presents. West known as it a “progressive third way” wherein drivers get extra protections, whereas Uber avoids getting saddled with the prices related to a workforce of W-2 workers.
If Uber in the end was pressured to reclassify drivers, it could more than likely restrict driver flexibility, West mentioned. “Drivers would not be able to choose when to sign on anytime they want it,” he mentioned. “They would work in shifts like every other employee works in shifts. Drivers would not be able to choose to sign off whenever they wanted to because there would be a set time that they would have to work, they would not be able to do that.”
Consultants have mentioned there’s nothing in federal or state regulation that precludes Uber from providing its drivers the identical flexibility as workers as they’ve now as contractors.
Uber clearly is rattled by the passage of AB5. And different states seem poised to take up their very own measures concerning gig work, placing additional monetary stress on the unprofitable ride-hail firm. However West mentioned that no matter these attainable outcomes, Uber would survive.
“This business is incredibly adaptable and has withstood enormous, enormous challenges,” he mentioned. “And it has always come through those stronger and more responsive.”