Earlier this week, both Uber and Lyft threatened to shut down in California as a result of a ruling that would force them to reclassify their drivers as employees. Lyft even announced that it would stop operations starting this Friday. But in a few hours, that would no longer be necessary. Thanks to an appeal filed by both companies, a court had granted a temporary reprieve for them to continue business as usual. The appeals process could go on for months, as both Uber and Lyft attempt to buy more time.
The truth is, however, both companies have had nothing but time to comply with the law. The fact that they fought back, stalled, made excuses and are funding a ballot proposition that would undo worker rights, is a sign that these companies have no intention of following the rules or giving their drivers the benefits they deserve. They had their time, but they squandered it.
The legal drama began last year when California’s legislature signed Assembly Bill 5 (also known as AB5) into law. The intent of the law was to force gig economy companies such as Uber, Lyft and Doordash to reclassify their workers as employees so that they can get benefits like minimum wage, overtime, paid leave and healthcare — the latter of which has become even more important during the pandemic.
The reason this law affects companies like Uber and Lyft is that they are reliant on independent contractors, but AB5 has pushed to explicitly define what that term means. It’s a result of a landmark 2018 California Supreme Court ruling which required the so-called “ABC test’ (which is already used by the US Department of Labor and over 30 states) to determine whether a worker is an independent contractor. Someone can only be considered an independent contractor if they meet three criteria: they have control over how the work is done, they’re doing work that’s not in the usual course of the hiring entity’s business and they’re running the same type of business on their own.
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