Uber is threatening to leave California, and it appears that Lyft will follow suit. California has given Uber and Lyft only 10 days as of the 12th of August to reclassify drivers as full time employees. This means that they will have to provide benefits such as healthcare, sick leave, paid time off and overtime.
According to Uber CEO Dara Khosrowshahi it will take much longer to reclassify workers, and they will have to shutdown for a few months.
It appears as this is just a stall tactic. Uber and Lyft have spent millions on putting a new initiative on the ballot, proposition 22. Their hope is that shutting down for a few months will sway voters in favor of the initiative, keeping drivers as independent contractors.
We recently interviewed our audience on our YouTube channel Gig Nation, to see what they thought about full time status. Out of 184 gig workers surveyed, 74% thought that full time employment was a negative in the gig economy.
It’s important to note that Uber has been pushing the notion that flexibility will not be maintained if this becomes full time employment. That seems to be the number one factor considered by most gig workers. After all, we’ve yet to see many companies provide anything near the flexibility of driving for Uber to their full time employees. Would Uber have any incentive to provide such flexibility? After all, the flexibility is part of what makes their business model work (with independent contractors). It allows Uber to let as many drivers as they want drive at any given time.
But if they are forced to provide benefits, wouldn’t they want to get exactly 40 hours a week out of drivers? And would they really let drivers collect overtime wages?
I think it’s safe to say that we all want to see drivers get taken care of. Gig economy apps need to do a better job of that. But how much can these unprofitable businesses afford to provide? It looks like we’ll be finding out soon!
Uber, Lyft, Doordash, Instacart and other gig workers stand to gain from this outcome. This will result in higher earnings for gig companies without a doubt. It should keep prices lower for consumers as well.
As far as workers rights, AB5 would have increased them – but it’s tough to gauge what the cost would be in terms of layoffs, decreased demand for rides/deliveries as prices increased, and potential lack of flexibility
. Uber and other gig companies did a lot to increase worker rights leading up to this vote. They introduced paid leave sick time off, made offers more transparent in app (for example total pay plus tips shown before accepting), allowed workers to decline and cancel as many offers as they like without being penalized, and continue to introduce features that improve benefits and make work more like independent contractor status. It’s been a huge step forward for gig workers, but there is still a lot of work to do!