Are Uber and Lyft just bluffing?
Both services for riding dogs are threatening to suspend their operations in California after a judge denied an exemption for them from ABV of the AB5, the new state law that requires companies to classify drivers as employees.
The court order gave Uber and Lyft 10 days from the August 10 ruling to change the status of independent drivers of their drivers and provide them benefits such as health insurance and minimum wage. The companies, which are appealing the decision, have already lost a bid to extend the 10-day stay on the conviction, tighten the deadline to stop the drivers – or operations in the state – until August 20 to classify.
California is home to both markets, and a great market for each. Leaving would be a risk not only for Uber and Lyft, but for tens of thousands of drivers depending on the companies for revenue, and for the customers depending on them for transportation.
That’s exactly the kind of pressure that could support Proposition 22, a voting initiative in California supported by the gig platforms, to free them from drivers as employees should classify. But the voting question will not be put to voters until November, which means the companies have no choice but to pursue a successful appeal in court from AB5 until August 20 until the exemption, if they win one of voters, goes into effect .
A familiar scene for Uber
This is a familiar scene for Uber, which has regularly threatened cities and sued customers if faced with regulations that would change their business model. In 2015, when New York City first considered putting a cap on the number of ride-healing cars, Uber launched an aggressive campaign in response, tracing traditional taxi drivers as a history of discrimination against people of color. In 2016, Uber left the city of Austin, Texas, after the city council began improving enhanced background checks for drivers. Uber returned the following year after the Texas mayor signed a law that ignored city rules.
If Uber and Lyft were to leave California, the impact on both would be relatively limited due to the pandemic. Rides in California are down at least 80% for both Uber and Lyft, according to data from research firm Second Measures.
“Given the depressed driving volumes now due to the pandemic, this is probably the best time for [Uber and Lyft] to do this, ”says Tom White, an analyst at DA Davidson. “It could motivate voters even more to bring ride-sharing back to California in the election.”
Whether Uber and Lyft follow suit, it’s clear that both companies are planning to double down on their efforts to win on Prop 22, instead of changing their business models.
“Our focus is on Prop 22, and we are confident in moving forward,” said John Zimmer, president of Lyft, about the company’s call in the second quarter.
A third way?
Uber has, while strongly opposing AB5 regulation, offered other concessions on flexible working. Prior to the recent ruling in California, Uber CEO Dara Khosrowshahi wrote in a New York Times op-ed about the need for a “third way” that would give drivers a safety net while maintaining their independent status.
But Brian Chen, a lawyer at the National Employment Law Project, says there is nothing in the law that requires an employee to give up flexibility. “It’s just another threat posed by the companies, that if they are held accountable by the public, they will take it out on their workers,” he says. (Uber has warned that if it is forced to reclassify drivers as employees, there will be fewer drivers on the road and prices will increase.)
Since AB5 went live in California, Uber and Lyft have both been getting greater pressure elsewhere on their business models. Just in recent weeks, the Pennsylvania Supreme Court has qualified an UberX driver for unemployment benefits, while in Massachusetts, Attorney General Uber and Lyft sued, challenging how they classify drivers.
Meanwhile, the pandemic is due to the inequality between different classes of workers. The increased attention to the treatment of workers could move opinion polls, labor organizers say.
“Calls to change their explosive business model are getting louder today,” said Steve Smith, a spokesman for the California Workers’ Federation. “We are confident that voters have no appetite for giving these companies a free pass to continue to defraud workers and shift the burden instead to taxpayers.”
Uber, Lyft, Instacart, DoorDash, and Postmasters raised more than $ 110 million to support Prop 22, which would qualify drivers for minimum income, health care subsidies, and car insurance, but they would not classify them as employees. . Voters, however, decide the question, it could become a model for other states and change the landscape for millions of American gig workers.
