In September 2019, California passed Assembly Bill 5 – that goal of which was to convert hundreds of thousands of contract workers to employee status to institute wage floors and benefits. On January 1, 2020, the law took effect. Now, rideshare companies are fighting back. Uber and Lyft are refusing to reclassify their fleet of drivers as employees.
The new law makes it harder to gig companies to hire workers as contractors. Supporters for the bill claim companies exploit contract workers for years. Without an employee status, benefits like health coverage and workers’ compensation don’t exist. Additionally, independent contractors are not subject to government rules on minimum wage, overtime, and rest breaks.
Under the new law, someone can only be classified as an independent contractor if they are free from the control and direction of an employer, perform work that’s considered outside the employer’s core business, and regularly engage in an “independently established trade, occupations, or business.”
Rideshare companies spent the latter part of 2019 fighting the bill, claiming classifying drivers as employees would destroy how efficient their business models are. Some gig companies have tried negotiating with lawmakers and labor unions to create an alternate class of workers. Essentially, people would be contractors with added benefits. That compromise has been ruled out, however. Uber and Lyft are now taking their case directly to voters with a $90 million ballot initiative.
Uber is also challenging AB5 with a lawsuit in federal court, calling the law unconstitutional and claiming it unfairly discriminates against technology platforms and those who make a living through them.
While some drivers support AB5, others do not. A group called Gig Workers Rising, who lobbied for the passing of AB5, has demanded better wages and the opportunity to collectively bargain. Others, however, are concerned about losing the flexibility that comes with setting their own hours as a contractor.
While the immediate implications regarding being an employee versus a contractor for ride-hailing companies revolve around benefits and pay, this law could also change how personal injury claims and lawsuits are handled. If you’ve been in a rideshare accident, you’ll need help from the Rideshare Law Group. We handle Uber and Lyft crashes for victims on a national basis. If you’re looking to recover compensation for your medical expenses, lost wages, and more after a crash caused by your rideshare driver, contact us today.