(CN) – Asking to be carved out of an unfriendly California labor proposal, Uber and Lyft announced Wednesday they would consider paid vacation and retirement benefits for their drivers if the companies are excluded from the pending legislation.
The olive branch comes in the wake of the companies’ disappointing Wall Street debuts and amid the joint-effort by an influential California lawmaker and the state’s labor unions to force the gig economy to extend benefits to its workers.
In an opinion piece published by the San Francisco Chronicle, the companies’ CEOs said that classifying drivers as employees would ruin the flexibility that allows drivers to work whenever they want.
“Some have proposed turning independent workers into employees in the belief that this would solve their challenges,” wrote Uber CEO Dara Khosrowshahi, Lyft CEO Logan Green and Lyft President John Zimmer. “But reclassification misses two important points: First, most drivers prefer freedom and flexibility to the forced schedules and rigid hourly shifts of traditional employment; and second, many drivers are supplementing income from other work.”
Uber and Lyft are hoping to be carved out of Assembly Bill 5, legislation born from an important 2018 California Supreme Court ruling in which the court sided with a class of independent delivery drivers who argued they were wrongly denied employment protections.
In Dynamex v. Superior Court, 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, that the work falls outside its usual course of business, and that the worker is “customarily engaged in an independently established trade.” The three prongs have been referred to as the “ABC test,” and this the standard that Assemblywoman Lorena Gonzalez, D-San Diego, is attempting to codify in state law through AB 5.
While Gonzalez has agreed to exempt professions including real estate agents, doctors, lawyers and hairstylists from her bill, she has ignored Uber and Lyft’s requests to include ride-share drivers.
“Big businesses shouldn’t be able to pass their costs on to taxpayers while depriving workers of the labor law protections they are rightfully entitled to,” Gonzalez said after AB 5 was cleared by the Assembly last month. The measure is currently pending in the state Senate and would eventually need to be signed by Democratic Gov. Gavin Newsom.
But the companies’ public pitch wasn’t well received by Gonzalez, who chairs the powerful Assembly Appropriations Committee, or the labor unions behind AB 5.
“Uber and Lyft haven’t presented a reason why they can’t treat workers like employees, but they have acknowledged that not all drivers make even a minimum wage,” Gonzalez tweeted.
Steve Smith, communications director for the California Labor Federation, called the proposal “inadequate.”
“We continue to believe that employee status is critical for gig workers and for the future of our economy in California,” Smith said in an email. “We urge gig corporations to comply with the law under the Dynamex decision by affording their workers all basic protections like workers’ compensation and unemployment insurance they deserve as employees.”
The companies say they will form a “new driver association” and work with the Legislature on ways to reimburse drivers for downtime between rides.
“Today in California, 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,” the op-ed continues.
In addition to AB 5, Uber is also facing a series of high-profile lawsuits filed in California by drivers and competitors.
Last month, a federal judge in San Francisco hinted that he will likely advance a class action that could make Uber change the way it classifies drivers as independent contractors in California. The lawsuit was filed in wake of the April 2018 Dynamex decision by Los Angeles-based Diva Limousine. The competitor says Uber is able to offer predatory prices by classifying its drivers as independent contractors.