California’s Independent Contractor Law Battle Heats Up

Uber vehicles line up at the new 'LAX-it' ride-hail passenger pickup lot at Los Angeles International Airport (LAX) in Los Angeles on Nov. 6, 2019. (Mario Tama/Getty Images)

On Jan. 1, 2020, California’s new independent contractor law goes into effect, requiring many contract workers to be classified as employees with full benefits. Meanwhile, many opponents and supporters of the law are gearing up for a legal fight.

The California Trucking Association (CTA) filed a lawsuit in early November challenging the law. The CTA says the new law will harm independent truckers and owner-operators in the state.

On Nov. 21, the author of the legislation, Assemblywoman Lorena Gonzalez (D-San Diego), recently asked city attorneys to file injunctions on Jan. 1 against businesses that don’t follow the law.

Uber, Lyft and DoorDash also announced a ballot initiative for the 2020 election that would challenge the law. Uber has said that the company plans to continue to regard drivers as independent contractors, and it will defend its position in court if necessary.

The law, Assembly Bill 5, mandates that the companies provide healthcare and other benefits to contractors working for them. The three major ride-share companies, believing that the law would negatively impact both company costs and worker flexibility, have dedicated $90 million to the campaign to peel back portions of the law.

AB-5 states “a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor.”

Exceptions would be granted if “the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity’s business, and the person is customarily engaged in an independently established trade, occupation or business.”

The bill was approved by Governor Newsom on Sept. 18 and was supported almost entirely along Democratic party lines, while nearly all Republicans were opposed.

Many gig economy workers have expressed concerns about their ability to work flexible hours and for multiple employers as a result of the new law.

“For me, somebody who is [driving] specifically for that flexibility, [AB-5] is a move that is going to take that away from me,” Akamine Kiarie, a student at Sacramento State University who drives for Lyft, told The Epoch Times.

“Even though it may have ‘good intentions,’ what AB-5 does is just hurt not only the drivers, but also the companies, because now they are going to have to figure out a whole different dynamic. The way it was worked. Lyft and Uber were addressing something that was missing in the market. Those that are making [the] argument to be employees, cab companies are still a thing. If you want to be an employee, then go do that,” he added.

The ballot initiative backed by Uber, Lyft, and DoorDash, known as the Protect App-Based Drivers and Services Act, aims to continue allowing drivers to be classified as independent contractors while also guaranteeing them benefits such as healthcare and worker’s compensation.

The ballot measure would require certain criteria for drivers to be met, for example having control over when, where, and how long they work, as well as the ability to work for multiple companies, according to the initiative’s website.

“The whole point of the ballot measure is to protect the right of ride-share and delivery drivers to remain flexible. Drivers overwhelmingly want flexibility to be able to drive whenever they want. If they were employees they’d have to be on shifts and wouldn’t have flexibility with driving or income,” said Stacey Wells, spokeswoman for the Protect App-Based Drivers and Services Act ballot initiative.

“This doesn’t rewrite AB-5. What this measure does is that it requires app-based ride share and delivery service companies to provide a few new protections and benefits for drivers,” Wells clarified.

According the initiative’s website, the measure provides an earnings guarantee in which drivers would receive at least 120 percent of minimum wage and 30 cents per mile for gasoline and vehicle expenses.

It also would provide drivers with a healthcare stipend after working 15 hours per week, with drivers who work 25 hours per week or more to receive an amount equivalent to 82 percent of a Covered California Bronze health insurance plan. In addition, optional accident insurance to cover on-the-job injuries is available.

Among other portions, the initiative would mandate recurring background checks, mandatory safety training, a zero-tolerance policy for alcohol and drug offenses, and a cap on driver hours per day to “prevent sleepy driving.”

In addition to Uber, Lyft and DoorDash, many community groups and public safety organizations have rallied behind the initiative, including Fathers against drunk driving, the CalAsian Chamber of Commerce, and the NAACP.

Not all however, are in favor of the initiative.

“This measure is another brazen attempt by some of the richest corporations in California to avoid playing by the same rule as all other law-abiding companies,” said the California Labor Federation in a statement. “California unions will join drivers who want fair wages, better treatment and flexibility to defeat this corporate ploy.”

The Protect App-Based Drivers and Services Act is expected to appear on the November 2020 ballot in national, state, and local elections.