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Uber and Lyft declared war on their California drivers this week. The companies’ drivers have been protesting low wages and abhorrent working conditions in the gig economy, and in California, supporting a bill expanding gig workers’ rights which could be signed by Governor Gavin Newsom in the next two weeks. In response to the likely passage of this bill, Assembly Bill (AB) 5, Uber, Lyft, and other companies have already pledged to spend nearly a hundred million dollars launching a 2020 ballot measure campaign that would effectively invalidate the rule — and plunge gig workers back into the unregulated abuse and exploitation they currently face. Workers of all kinds across California should support gig workers and the passage of AB 5, while getting ready to take the fight to the next phase by opposing the companies’ ballot measure. And anyone who supports AB 5 would do well to examine Bernie Sanders’s proposed sweeping workers’ rights legislation, including a federal law that will accomplish what AB 5 would accomplish in California.

What Is Ab 5? AB 5 closes a major loophole in US labor law, employee misclassification. Major protections in US and California labor law — including minimum wage and overtime laws, the right to join a union, workplace safety protections, and more — cover most people classified as employees. However, many companies, including gig economy darlings like Uber and Lyft — but also many more “traditional” companies — misleadingly classify their workers as “independent contractors” to get around these laws. Of course, it makes sense to create a separate legal category for people who are actually independent contractors: a self-employed plumber or accountant who directly establishes contracts with different clients and sets their own hours, rates, and mode of work while having to invest in their own tools and capital. But Uber and Lyft drivers are not, by any reasonable definition, “independent contractors,” despite what the companies may claim. Drivers rely entirely on the companies to arrange contracts with clients — riders can only call a car through the company app, and drivers are not able to negotiate with clients. Companies set rates, extracting a per-ride price from the client based on an algorithm, and giving the driver a (small) cut of the revenue — without drivers having any say over this. Uber and Lyft have control over who can be a driver, kicking drivers off the app for various minor infractions — just as a traditional boss can fire a worker for any reason whatsoever under our country’s system of “at-will” employment (unless the worker is represented by a union). And the much-vaunted “flexibility” of gig work is mostly an illusion: if drivers want to get enough clients quickly enough to make a decent living, they have to work certain hours that are always the busiest, such as rush hour or late weekend nights. AB 5 would eliminate this loophole by instituting a strict test to determine if workers are employees or independent contractors. In effect, according to AB 5, a worker is classified as an employee if a worker’s activity is controlled by a company, if they are doing work that is central to the company’s business, or the worker has an independent business in that industry. Clearly, Uber and Lyft drivers are doing work central to their companies’ businesses, and therefore would no longer be independent contractors if AB 5 passes.

Why Bosses Love Misclassification The results of this arrangement are increased profits and flexibility for the companies, and poverty wages, terrible conditions, and debt for the drivers. Companies love misclassifying employees as independent contractors because it displaces the major risks of the enterprise onto the drivers while maintaining all of the benefits of being, in reality, dictatorial bosses. Since drivers are not covered by minimum wage laws and are paid per ride instead of per hour, all the time that drivers might spend not driving a client — idling waiting for a new job, stuck in traffic on the way to pick someone up, time spent dealing with a traffic ticket or accident — are free for the company. But because the driver is missing out on rides during those times, they are essentially wasting time and losing money. Since drivers are responsible for their own cars, companies are relieved of the enormous costs of maintenance, repairs, and insurance that come with driving a car all day long. At the end of the day, along with taxes, these costs alone can cut what might seem like a decent living to an effective $3 per hour rate over the long run. Ending misclassification would mean that drivers’ average hourly pay would at least meet minimum wage laws, $12 per hour in California, while being eligible for overtime benefits. Many drivers also take out loans to get the cars for the job, sometimes through car-loan schemes from Uber and Lyft. This means that drivers who were enticed by the companies’ advertisements of high incomes and flexible hours are, once they realize how little money they actually make, stuck with the debt incurred by the car. Finally, Uber and Lyft avoid a major responsibility of traditional employment: health and safety regulations, and worst of all, unionization. Since the drivers are not legally employees, they can’t unionize — collective bargaining of independent contractors is treated by labor law as cartel-like price-fixing. And independent contractors aren’t protected by occupational health and safety codes (OSHA). The company reaps the benefits of the drivers’ “independence” — displacing risk and capital and maintenance costs onto the drivers — while retaining all the benefits of real employment: setting rates, controlling the workforce through discipline and incentives, and keeping as much of the profits as they want. In fact, this is the whole business model of the “disruptive” gig economy in the first place: use an app that allows companies to retain control over prices and wages while skirting labor law and market risks. And this misclassification scheme is not new to Uber and Lyft. Gig economy companies like Postmates and DoorDash and other “traditional” companies like port trucking, FedEx, do the same.