Capitol Alert

Tech companies ready to spend $90 million on initiative to fight California employment rule

Watch Lyft and Uber drivers swarm to Capitol to support bill

Drivers from Uber and Lyft converged on the Capitol from across California to support Assembly Bill 5, which would force ‘gig economy’ employers to treat independent contractors as employees, on Wednesday, Aug. 28, 2019.
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Drivers from Uber and Lyft converged on the Capitol from across California to support Assembly Bill 5, which would force ‘gig economy’ employers to treat independent contractors as employees, on Wednesday, Aug. 28, 2019.

Ride-hailing companies Uber and Lyft are threatening to launch a ballot measure if they don’t get to rewrite new labor rules dictating who must be treated as an employee, officials at Lyft said Thursday.

The two companies are proposing some benefits for drivers in exchange for an exemption from proposed labor rules that would allow them to continue classifying drivers as independent contractors. The two companies plan to pour $30 million each into a fund for a ballot measure if they don’t get their way, officials at Lyft said.

Late Thursday, gig economy food-delivery service DoorDash said it would commit another $30 million to the proposed initiative.

The announcements come as the window closes to win an exemption from an existing bill that will force employers to treat independent contractors as employees. That legislation, Assembly Bill 5, would codify a California Supreme Court ruling known as Dynamex that restricts when employers can classify workers as independent contractors and deny them benefits like overtime, sick leave and minimum wage.

AB 5 author, Assemblywoman Lorena Gonzalez, D-San Diego, has made it clear she doesn’t intend to give exemptions to the ride-hailing companies through the bill.

The companies insist that their business model relies on being able to treat employees as independent contractors and that many drivers prefer the flexibility the company offers.

Lyft released a study on Thursday that suggested it would have fewer 300,000 fewer drivers in California if Gonzalez’s bill becomes law and it is compelled to provide schedules, breaks and full employment benefits to drivers.

“We are working on a solution that provides drivers with strong protections that include an earnings guarantee, a system of worker-directed portable benefits, and first-of-its kind industry-wide sectoral bargaining, without jeopardizing the flexibility drivers tell us they value so much,” Lyft spokesman Adrian Durbin said in a statement Thursday. “We remain focused on reaching a deal, and are confident about bringing this issue to the voters if necessary.”

On Twitter, Gonzalez blasted the tech companies’ plan to challenge the proposed law.

“Billionaires who say they can’t pay minimum wages to their workers say they will spend tens of millions to avoid labor laws. Just pay your damn workers,” she wrote.

California Labor Federation Executive-Secretary Treasurer Art Pulaski added that state labor would be unified in opposing such a measure and would “meet the gig companies’ absurd political spending with a vigorous worker-led campaign.”

“This announcement lays bare the real motivation of multi-billion dollar gig companies,” he said in a statement. “They never cared about their drivers or workers. The only thing they care about is their bottom line and making their executives even richer than they already are.”

Lyft officials are proposing a wage guarantee that drivers would earn at least 32 percent above the local minimum wage plus reimbursement for expenses. Under the proposal, they said drivers would have no limit on their earnings, and tips would be added on top of their guaranteed wages.

The companies are also proposing a fund that could cover benefits for drivers, such as paid sick and family leave. The companies are not suggesting allowing drivers to unionize, but are instead proposing a system of “sectoral bargaining” which would let gig economy drivers negotiate industry-wide benefits.

Officials at labor union SEIU told The Bee Wednesday they are pushing to pass AB 5 without an exemption for ride-hailing companies and fighting to allow Uber and Lyft workers to unionize. They said they were in talks with Gov. Gavin Newsom’s chief of staff Ann O’Leary.

“The governor’s office and Ann O’Leary have always worked to forge a way forward by upholding the status and protections gig workers would gain under AB5,” SEIU state council President Bob Schoonover said in a statement.

“California has a long history of creating labor law for specific industries that extend wages, protections and collective bargaining for excluded workers. That is the kind of change gig workers need and are fighting for.”

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