Gig-Economy Giants Want California Voters to Shield Them From New Law

A driver displaying Lyft and Uber stickers on his front windshield drops off a customer in downtown Los Angeles on Jan. 12, 2016. (AP Photo/Richard Vogel, File)

SACRAMENTO, Calif. (CN) – A coalition of tech companies led by Uber, Lyft and DoorDash announced a proposed ballot measure Tuesday intended to upend a new California law that will require them to classify their drivers as employees.

The gig-economy titans say they are committed to spending $90 million to qualify their proposal for the November 2020 statewide ballot and allow voters the opportunity to overturn the contentious union-backed bill passed by lawmakers this year.

Critics of Assembly Bill 5 claim it could shatter the gig economy’s business model and end flexibility for workers who are currently classified as independent contractors and can work whenever they want.

“Forcing ride-share and delivery drivers to become employees would significantly limit the availability and affordability of these services to exist, and would stifle economic growth and small business expansion across our state, while ultimately driving up costs for the consumer,” said David Nelson, director of public policy for CalAsian Chamber of Commerce, in a statement.

The legislation by Assemblywoman Lorena Gonzalez, a San Diego Democrat, codifies the game-changing labor standard established by the California Supreme Court in its 2018 ruling Dynamex v. Superior Court.

In Dynamex, the state’s high court ruled that in order to classify workers as contractors, a company must show it does not directly control the worker, the work falls outside its usual course of business, and the worker is “customarily engaged in an independently established trade.” The three prongs have been referred to as the “ABC test,” and is the standard AB 5 intended to cement into law.

After months of tweaks and added exemptions for various professions – but not for ride-hail drivers – the Democratic-led Legislature cleared AB 5 during the final week of the session in September. Gov. Gavin Newsom signed the bill a week later, and it takes effect on Jan. 1, 2020.

Facing the possibility of having to extend employment benefits to millions of contractors, the tech companies quickly united and opened their wallets to fight the landmark new law.

The ballot measure revealed Tuesday at a press conference in Sacramento would keep drivers as independent contractors but extend benefits like earnings guarantees, reimbursement for certain expenses and health care subsidies. It also calls for recurring background checks for drivers and new safety training requirements.

“I’m supporting the ballot initiative because it’s going to allow me to keep my flexibility, and that’s the most important thing to me,” said Llewellyn Holloway, a retired Navy veteran who drives with Lyft, at the press conference. “For all the people who think we’re better off as employees, they’re wrong, they’re dead wrong.”

Assemblywoman Gonzalez trashed the proposal, arguing it would allow companies like Uber to reimburse drivers 30 cents per mile driven, when current law requires 58 cents per mile. She added the companies could continue to avoid paying workers’ compensation and social security costs and that it won’t allow ride-hail workers to unionize.

“This initiative is disingenuous,” Gonzalez said in a statement. “These billion-dollar corporations still refuse to offer their workers what every other employee in California is entitled to: earning the minimum wage for all hours worked, social security, normal reimbursements for their costs, overtime pay and the right to organize.”

California’s debate over labor classification has seeped into the presidential election as well, at least on the Democratic side: U.S. Senators Elizabeth Warren, Bernie Sanders and Kamala Harris have all come out in support of AB 5.

Before the supporters can begin collecting signatures from registered voters, state officials will have to release a title and summary of the proposed initiative. In order to land on the November 2020 ballot, the tech companies will likely need to gather over 600,000 signatures. Uber, Lyft and Doordash have each pledged $30 million to support the signature-gathering process.

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