Uber won’t be reclas­si­fy­ing its dri­vers from inde­pen­dent con­trac­tors to employ­ees in light of a new bill that passed in Cal­i­for­nia, large­ly because the bill doesn’t specif­i­cal­ly require them to do so, the company’s chief legal offi­cial argued Tues­day.

“Con­trary to some of the rhetoric we’ve heard, AB5 does not auto­mat­i­cal­ly reclas­si­fy any ride-share dri­vers from inde­pen­dent con­trac­tors to employ­ees,” Tony West, chief legal coun­sel at Uber, said in a press call with reporters. “AB5 does not pro­vide dri­vers with ben­e­fits. AB5 does not give dri­vers the right to orga­nize. In fact, the bill cur­rent­ly says noth­ing about ride-share dri­vers.”

The bill in ques­tion, Assem­bly Bill 5 (AB5), cod­i­fies a recent Cal­i­for­nia Supreme Court rul­ing that makes it much hard­er for com­pa­nies like Uber to clas­si­fy its dri­vers as inde­pen­dent con­trac­tors. It enshrines the so-called “ABC test” for deter­min­ing whether some­one is a con­trac­tor or employ­ee. Some form of an ABC test is already law in many states, includ­ing Mass­a­chu­setts, Vir­ginia, and New Jer­sey.

AB5 also expos­es Uber to more law­suits from city and state pros­e­cu­tors

West said Uber could pass the ABC test because dri­vers aren’t core to its busi­ness. “Under that three-part test, arguably the high­est bar is that a com­pa­ny must prove that con­trac­tors are doing work ‘out­side the usu­al course’ of its busi­ness,” West said. ”Sev­er­al pre­vi­ous rul­ings have found that dri­vers’ work is out­side the usu­al course of Uber’s busi­ness, which is serv­ing as a tech­nol­o­gy plat­form for sev­er­al dif­fer­ent types of dig­i­tal mar­ket­places.”

West is cor­rect in say­ing the bill doesn’t auto­mat­i­cal­ly turn every Uber dri­ver into an employ­ee. Much of that work will take place behind the scenes in California’s reg­u­la­to­ry agen­cies where unem­ploy­ment insur­ance claims, work­ers com­pen­sa­tion claims, and oth­er indi­vid­ual tests are brought.

But the argu­ment that its dri­vers “oper­ate out­side the usu­al course of Uber’s busi­ness” is sure raise a few eye­brows. West said Uber intends to fol­low AB5 should it be put into law next year, but that it will con­tin­ue to try to prove that it doesn’t fall under its legal frame­work.

AB5 also expos­es Uber to more law­suits from city and state pros­e­cu­tors. The bill includes an amend­ment that empow­ers the state’s attor­ney gen­er­al and any dis­trict attor­ney “of a city hav­ing a pop­u­la­tion in excess of 750,000” to file for injunc­tive relief if Uber is found to be vio­lat­ing its pro­vi­sions. (San Francisco’s pop­u­la­tion is rough­ly 750,000.)

San Fran­cis­co Dis­trict Attor­ney Den­nis Her­rera appears to be inter­est­ed in such a job. “The state doesn’t nec­es­sar­i­ly have the resources to han­dle every case,” he said in a state­ment, accord­ing to the San Fran­cis­co Exam­in­er. “City attor­neys, dis­trict attor­neys and oth­er local pros­e­cu­tors are a force mul­ti­pli­er when it comes to pro­tect­ing work­ers and con­sumers. It makes sense to have effec­tive enforce­ment. You do that by pro­vid­ing local pros­e­cu­tors with the legal tools to do the job.”

Asked whether the com­pa­ny could afford a poten­tial tidal wave of law­suits, West was cir­cum­spect. “Uber is no stranger to legal bat­tles,” he said. “I think that’s one rea­son I have my job.” In oth­er words, Uber is so used to being sued, it’s not clear that AB5 presents any unique chal­lenges in that respect.

“Uber is no stranger to legal bat­tles”

West claimed that Uber “nev­er lob­bied” against AB5. The com­pa­ny has met with mul­ti­ple stake­hold­ers, includ­ing Gov­er­nor Gavin New­som, state law­mak­ers, and labor unions rep­re­sent­ing dri­vers. The company’s pro­pos­al to estab­lish a $21-an-hour, on-trip min­i­mum wage for dri­vers, paid time off, and com­pen­sa­tion for dri­vers injured on the job was reject­ed by law­mak­ers before the pas­sage of the bill.

Now the com­pa­ny is plan­ning on dump­ing $60 mil­lion, along with Lyft, into a cam­paign account to advo­cate for a bal­lot ini­tia­tive in 2020 to ask vot­ers to sup­port the cre­ation of a new clas­si­fi­ca­tion for ride-share dri­vers — effec­tive­ly side­step­ping the thorny mess that AB5 presents. West called it a “pro­gres­sive third way” in which dri­vers get more pro­tec­tions, while Uber avoids get­ting sad­dled with the costs asso­ci­at­ed with a work­force of W‑2 employ­ees.

If Uber ulti­mate­ly was forced to reclas­si­fy dri­vers, it would most like­ly lim­it dri­ver flex­i­bil­i­ty, West said. “Dri­vers would not be able to choose when to sign on any­time they want it,” he said. “They would work in shifts like every oth­er employ­ee works in shifts. Dri­vers would not be able to choose to sign off when­ev­er they want­ed to because there would be a set time that they would have to work, they would not be able to do that.”

Experts have said there is noth­ing in fed­er­al or state law that pre­cludes Uber from offer­ing its dri­vers the same flex­i­bil­i­ty as employ­ees as they have now as con­trac­tors.

Uber clear­ly is rat­tled by the pas­sage of AB5. And oth­er states appear poised to take up their own mea­sures regard­ing gig work, putting fur­ther finan­cial pres­sure on the unprof­itable ride-hail com­pa­ny. But West said that regard­less of these pos­si­ble out­comes, Uber would sur­vive.

“This busi­ness is incred­i­bly adapt­able and has with­stood enor­mous, enor­mous chal­lenges,” he said. “And it has always come through those stronger and more respon­sive.”

Illus­tra­tion by Alex Cas­tro / The Verge

Source link