California Sues Uber, Lyft Saying They Mis-classified Drivers As Independent Contractors

Lawsuit sets up confrontation over new state law. California Sues Uber, Lyft Saying They Mis-classified Drivers As Independent Contractors

California sued Uber Technologies Inc. and Lyft Inc. for allegedly misclassifying their drivers as independent contractors instead of employees, a move that intensifies a battle between the ride-hailing giants and their home state.

California Has U.S.’s Lowest Infection Rate

New York, California, New Jersey, And Alabama Move To Ban ‘Forever Chemicals’ In Firefighting Foam

California Wants Its Salton Sea Located In The Imperial Valley To Be ‘Lithium Valley’

California Will Allow College Athletes To Earn Endorsement Money

California Defies Doom With No. 1 U.S. Economy

California Lawmaker Says National Privacy Law Is a Priority

Ultimate Resource On California’s (And Other States, Countries) User Data Privacy Laws

California Legalizes Public Banking!!!!

California, which is suing the companies under authority granted by a new state law, said the decision to classify drivers as contractors has deprived them of rights such as paid sick leave and unemployment insurance.

“We believe it’s time for all workers to be treated fairly,” California Attorney General Xavier Becerra said Tuesday. “Innovation, regardless of what Uber and Lyft tell you, doesn’t require these companies to mistreat their workers.”

The state, which seeks up to millions of dollars in civil penalties and to force the companies by court order to reclassify drivers and restore what it called unpaid wages, also said Uber and Lyft haven’t contributed state payroll taxes used to fund general health welfare programs. The lawsuit was filed with the city attorneys of San Francisco, where Uber and Lyft are based, and Los Angeles and San Diego.

Uber and Lyft have maintained that their drivers are properly classified after the state passed the so-called gig economy law last year and Gov. Gavin Newsom signed it. The law codified a test companies must pass to classify their workers as independent contractors, which enables companies to avoid costly benefits such as health care. Uber and Lyft have said the law could take away flexibility for drivers and force them to work pre-scheduled shifts.

“We are looking forward to working with the Attorney General and mayors across the state to bring all the benefits of California’s innovation economy to as many workers as possible, especially during this time when the creation of good jobs with access to affordable health care and other benefits is more important than ever,” a spokeswoman for Lyft said in a statement.

An Uber spokesman said the company would contest the action in court. “At a time when California’s economy is in crisis with four million people out of work, we need to make it easier, not harder, for people to quickly start earning,” the spokesman said.

Lyft has said it has 325,000 drivers in California. Uber has said it has more than 200,000.

The legal battle comes as the coronavirus pandemic has raised an unprecedented crisis for the ride-hailing companies. Ridership has plummeted as governments have encouraged or ordered people to shelter in homes and closed nonessential businesses in a bid to stop the spread of Covid-19.

Spending on Uber and Lyft rides plunged 83% during the week of April 20 in the U.S. compared with a year ago, according to data from researcher Edison Trends.

Uber drivers have turned to the food-delivery business while ride-hailing has languished. The company has pulled its guidance ahead of reporting first-quarter financial results on Thursday.

Lyft last week announced it was cutting 17% of its workforce and instituting unpaid furloughs and salary cuts for those who remain. The company reports first-quarter results on Wednesday.

The confrontation highlights the difficulties in the pandemic for some workers on the front lines, including those making deliveries, who may not have benefits such as sick pay. A number of companies have provided paid sick leave only in the event of a positive Covid-19 diagnosis for some workers.

Many drivers have talked about the conundrum they face: Drive and risk getting sick, or stay home and don’t get paid.

“The pandemic highlights the danger of the work these essential workers are doing,” San Francisco City Attorney Dennis Herrera said Tuesday.

California Gov. Gavin Newsom said Tuesday the issue predates the coronavirus. “The letter of the law has to be applied,” he said at a daily news conference. “We want to be cooperative and collaborative, but we as a state have to do what we’re going to do.”

Of the 4.1 million people who have filed for unemployment insurance in California since March 12, 450,000 did so through a program for the self-employed, including gig workers, according to Mr. Newsom.

Uber, Lyft and several other companies have amassed more than $110 million to pass a November ballot initiative to exempt themselves from the law. Uber, along with food delivery company Postmates Inc., late last year filed a lawsuit challenging the law. It is unclear how those plans have been affected by the impact coronavirus is expected to have on elections and organizing.

Since it was passed last fall, the new California law has prompted opposition from a number of industries, including free-lance journalism and trucking. Uber and Lyft have been among the most organized opponents of the legislation.

The companies have said the law doesn’t apply to their businesses but have also warned that if they are forced to reclassify their drivers, it could force them to hire far fewer drivers and reduce the areas where they operate.

Although the companies have said their workers are properly classified, they see their ballot initiative as a potential legal shield for lawsuits. The initiative, if passed in November, would promise benefits such as health care for drivers who work a certain amount of hours a week but also seeks to eliminate any lawsuits in the past year.

A group representing the companies in March said more than one million signatures had been collected, nearly double the number required to qualify for the November ballot.

Uber is “pushing to raise the standard of independent work for drivers in California, including with guaranteed minimum earnings and new benefits,” the Uber spokesman said.

Updated: 8-20-2020

Lyft, Uber Get More Time as They Fight California Order

Ride-hailing companies can continue operating while they challenge order to reclassify drivers.

Uber Technologies Inc. and Lyft Inc. will be able to continue conducting business as usual in California for now, after a state appeals court on Thursday paused a lower-court ruling that required the ride-hailing companies to reclassify their drivers as employees.

The reprieve means both companies can continue operating while they fight a high-stakes legal battle with their home state.

The court’s decision followed a flurry of public messaging by the companies earlier Thursday, capping a week of threats that they would shutter their services in California if the courts compelled them to reclassify their workers.

Lyft posted an announcement on its website Thursday morning saying it would halt its business there as of midnight. Uber put up what appeared to be a placeholder post on its site, with the heading, “Important Information About California Ridesharing Shutdown,’’ which it later removed.

Lyft confirmed it no longer plans to halt ride-hailing service in the state.

A state judge last week gave Uber and Lyft until Friday to reclassify their drivers as employees, after California sued the companies in May alleging they were violating a new state law.

California’s so-called gig-worker law that went into effect on Jan. 1 requires companies to treat workers as employees rather than independent contractors if they are controlled by their employer and contribute to its usual course of business, among other things. As employees, drivers would be eligible for sick days and other benefits, issues that have become more pressing during the coronavirus pandemic.

Uber and Lyft, both based in San Francisco, have argued they are technology platforms that connect riders with drivers, not transportation companies, so the drivers aren’t part of their usual course of business.

California’s Department of Justice, which is suing the companies, said in a statement Thursday, “We’re confident in the facts of our case and we look forward to continuing our fight to defend the rights of workers across the state.”

While Thursday’s stay opens the door for Uber and Lyft to continue operating in a key market—California accounted for 16% of Lyft’s rides in this year’s second quarter and 9% of Uber’s gross bookings before the pandemic—the prospect of reclassifying drivers in the future would undermine the economics of ride-hailing at a time the companies are already struggling to turn a profit.

After the lower court ruling, Uber and Lyft bargained for more time in legal filings to the appeals court that granted the stay. Uber said, for instance, that it would take several months to build a framework to reclassify drivers, including a system to monitor their meals and rest breaks, and would need additional staff to oversee day-to-day operations. Lyft, too, said it lacked the infrastructure necessary to upend its business “at the flip of a switch.”

The companies have their sights on a November ballot initiative, in which voters in California can decide whether to exempt them from the state law at the heart of the dispute. The outcome of the vote would supersede any pending litigation.

The court gave Uber and Lyft’s chief executives until Sept. 4 to submit sworn testimony saying they had developed the infrastructure needed for such a reclassification should their ballot measure and appeal fail.

Uber and Lyft have said reclassifying drivers would require them to work prescheduled shifts, robbing them of flexibility. For the reclassification to be economically viable, the companies say they would be forced to consolidate their fleet to fewer drivers who work 40 hours a week, the standard for full-time employees; drastically reduce their footprint in cities where demand is spotty; and raise prices for rides to offset the new costs associated with managing driver operations.

Uber, for instance, said it would be able to hire just a quarter of its more than 200,000 drivers in California and raise prices for rides as much as 120% to account for the millions of dollars it would need to invest to manage drivers as employees.

Bruce Schaller, a former deputy commissioner at the New York City Department of Transportation, said the California law doesn’t require drivers to work fixed hours or full time. “Many people work as part-time employees and still have flexibility,” he said. “It’s ludicrous for them to hide behind that argument when they have leeway to structure this the way they want.”

He also said the companies were exaggerating the potential costs and fare increases as a way to rally public support for their cause. “They already do those things. Are they saying they don’t have a computer system with drivers’ names in it, or a team to onboard and check backgrounds, or that they don’t process payments to drivers or track their movements? They do everything and more.”

California Assemblywoman Lorena Gonzalez, who wrote the law at the heart of the dispute, tweeted: “Uber & Lyft can quit crying now & work on reclassifying their drivers as employees…. Shame on them with their scare tactics!”

If the November ballot succeeds, the companies say they will guarantee new protections for workers, such as giving drivers 30 cents a mile driven to account for gas and other vehicle costs, health-care subsidies for drivers who work 15 hours or more a week and occupational-accident insurance coverage while on the job.

Critics say those protections fall short compared with the benefits awarded to employees. For instance, the standard Internal Revenue Service mileage rate that employers typically use to reimburse employees is 57.5 cents a mile.

Updated: 8-21-2020

Lyft, Uber Get More Time As They Fight California Order

Ride-hailing companies can continue operating while they challenge order to reclassify drivers.

Uber Technologies Inc. UBER -1.62% and Lyft Inc. LYFT -2.64% will be able to continue conducting business as usual in California for now, after a state appeals court on Thursday paused a lower-court ruling that required the ride-hailing companies to reclassify their drivers as employees.

The reprieve means both companies can continue operating while they fight a high-stakes legal battle with their home state.

Lyft confirmed it no longer plans to halt ride-hailing service in the state.

A state judge last week gave Uber and Lyft until Friday to reclassify their drivers as employees, after California sued the companies in May alleging they were violating a new state law.

As employees, drivers would be eligible for sick days and other benefits, issues that have become more pressing during the coronavirus pandemic.

Lyft, too, said it lacked the infrastructure necessary to upend its business “at the flip of a switch.”

Uber and Lyft have said reclassifying drivers would require them to work prescheduled shifts, robbing them of flexibility.

For the reclassification to be economically viable, the companies say they would be forced to consolidate their fleet to fewer drivers who work 40 hours a week, the standard for full-time employees; drastically reduce their footprint in cities where demand is spotty; and raise prices for rides to offset the new costs associated with managing driver operations.

Updated: 9-12-2020

A California Law Was Supposed To Give Uber Drivers New Protections. Instead, Comedians Lost Work

While companies like Uber, Lyft and DoorDash have fought AB-5 in court, the law has ensnared other freelance workers.

Early this year, the organizers of a small Bay Area theater told Alicia Dattner they wouldn’t be able to pay her for an upcoming comedy act. The reason: A new California law that reclassified gig-economy workers, such as Uber drivers, as employees meant it would be too expensive to hire her.

Ms. Dattner was confused. Why was a law aimed at Uber and Lyft affecting comedians?

“It makes no sense,” said Ms. Dattner, who also teaches comedy and public speaking workshops.

When California legislators passed the high-profile labor law last year, they said it would increase protections for drivers for ride-hailing and delivery companies such as Uber Technologies Inc., Lyft Inc. and DoorDash Inc.

By classifying these workers as employees, instead of independent contractors, the law, known as AB-5, would make these workers eligible for health insurance, paid time off and other benefits—if their roles included tasks that are part of the normal course of a company’s business, among other requirements.

It hasn’t worked out that way. The Silicon Valley companies have defied the lawmakers’ intentions, leaving their drivers’ status unchanged while they fight the law in the courts and wage a costly campaign to hold a statewide popular vote this November on a measure that would exempt them from the law.

Meanwhile, magicians, freelance journalists and interpreters have found themselves losing work: Many small businesses say such measures would be too costly to implement, and have instead opted to cut back on their use of independent workers.

Besieged with complaints, the California legislature earlier this month amended the law to exempt workers in industries from comedy to youth sports. While a huge array of groups with objections—including interpreters and journalists–were mollified, concerns about the law’s effects still linger among employers and workers alike, including small theaters, fast-food franchises and even some mall Santas.

The ride-sharing and delivery companies’ legal and political push against AB-5 is “such a frustrating example of the way you can buy your way into a regulatory environment that suits you,” said Veena Dubal, a professor who studies employment law at University of California, Hastings, and has been a vocal critic of the companies. “They have been defying the order since Jan. 1. Meanwhile, a yoga studio doesn’t have that luxury.”

Uber and Lyft have said they believe their drivers are still independent contractors under the law, in part because they describe themselves as digital-app companies that match drivers with riders, not transportation providers. The law doesn’t specifically mention ride-hailing or food delivery.

If forced to reclassify their drivers as employees, the companies say their businesses—already unprofitable—would be completely upended. They would need to pay workers hourly wages for scheduled shifts, dropping the flexibility many drivers enjoy. They would need to raise fares, decrease service and even stop operating in some areas, they say.

Uber estimated in a court filing that at least 150,000 of its 210,000 active drivers in California would no longer be able to work for the company, while fares would go up between 20% and 120% across the state. They have presented petitions signed by thousands of drivers opposing the law.

The companies are currently seeking to have California voters weigh in on the matter using the state’s ballot-measure process, which allows laws to be passed, overturned or amended by popular vote instead of by the legislature.

A Lyft spokeswoman said: “If the legislature had done its job and made policy that actually protected drivers, the ballot initiative wouldn’t have been necessary.”

Uber, Lyft, DoorDash and others have thus far spent $180 million to support Proposition 22, as the initiative is known, on the ballot Nov. 3, making it one of the most expensive ballot measures in California history. It dwarfs the more than $6 million being spent by labor groups opposed to the measure, which aims to classify the ride-hail and delivery companies’ drivers as independent contractors, exempting them from AB-5.

The AB-5 legislation grew out of a California Supreme Court decision in 2018 that implied a huge swath of professions should be classifying contract workers as employees, eligible for stronger labor protections such as workers’ compensation.

To clarify the issue, lawmakers in Sacramento decided to push legislation that would put broad new restrictions on when a company was able to rely on an independent contractor instead of an employee.

Debate over the bill quickly ballooned into a referendum on Uber, Lyft and the gig economy overall, with labor groups and most state lawmakers pushing to reclassify drivers and other contractors they contended were only nominally independent.

Initially the ride-hailing and food-delivery companies said the legislation would be disastrous, adding costs and robbing drivers of their flexibility.

Then, around the time the bill passed a year ago, the companies adopted a new argument, saying their drivers clearly didn’t qualify as employees under the law at all, in part because their main products were mobile apps, not transportation services.

Lawsuits followed, and a judge in San Francisco state court recently ruled against Uber and Lyft, saying companies had engaged in a “a prolonged and brazen refusal to comply with California law.” Still, the companies don’t have to change their operations until after the ballot measure in November.

Those who say they have lost work because of the law have been left bitter.

Mario Moncada, a Santa Monica, Calif., physical therapist, had long worked on a freelance basis, getting jobs through a home-health agency. He liked the flexibility and built up a subcontracting business of his own, sending work to other physical therapists. As a result of the law, his subcontracting business vanished and he had to become an employee of the agency, following a more rigid schedule. The shift cost him tens of thousands of dollars a year, he said.

“I now have to move out of my place of residence,” he said as he was packing up his house to leave for Louisiana.

The follow-up bill that was signed into law last week appears to offer a fix for physical therapists in similar situations, according to a trade group.

Lorena Gonzalez, the California assemblywoman who wrote both AB-5 and the follow-up measure, said she spent a good part of the year hearing concerns about the law, and tried to exempt groups on which it was having unintended effects.

Ms. Gonzalez, a San Diego Democrat, said that even with the recent exemptions, the law would still mean countless workers at nail salons and janitorial companies will now be treated as employees eligible for benefits like paid time off. Such workers have long deserved better protections, she said, while she remains upset about the ride-hail companies.

“We should all be outraged that they continue to not follow the law,” she said.

Some affected groups aren’t pleased.

Franchisees may qualify as employees, meaning a chain like 7-Eleven may need to employ people who lease and operate stores. Currently such franchisees pay a fee to the chain’s owner. Matthew Haller, a vice president at the International Franchise Association, said that some brands have halted expansion plans in California as a result of the law.

Small theater groups—which often paid musicians, actors and crew members as independent contractors—are particularly frustrated. Gail Gordon, founding director of the one-year-old Numi Opera in Los Angeles, said after the law passed, she realized how much higher her costs would be and in February canceled plans for a performance to be held in May.

“It would have put 30-plus percent on top of my budget—which was already well strapped,” she said. As it turned out, the performance of “Violanta,” an opera by a 20th-century Austrian composer, would have been canceled as a result of Covid-19, but she remains uncertain what the future holds for another she has scheduled for fall of next year.

“I don’t know what’s going to happen,” she said.

Updated: 10-20-2020

Uber Weighs California Overhaul If Ballot Measure On Workers Fails

Ride-sharing service says prices for riders will rise if company isn’t exempted from state law reclassifying drivers as employees.

Uber Technologies Inc. UBER 6.11% is considering an overhaul of its business in California if voters reject a ballot measure that would prevent the ride-hailing company’s drivers from being classified as employees.

“We are looking at all our options,” Uber Chief Executive Dara Khosrowshahi said, without elaborating, during The Wall Street Journal’s annual Tech Live conference, held remotely on Tuesday. “We will do our best to operate in California…Where in California we will operate is a question mark, and the size and scale of business will be a big question mark,” he said.

The state implemented a law on Jan. 1 that seeks to reclassify ride-share and food-delivery drivers as employees, making them eligible for minimum wage, sick days and health insurance.

Uber, Lyft Inc., DoorDash Inc. and others have collectively raised around $200 million to promote a ballot measure—the most expensive in California’s history—on Election Day that asks voters exempt them from the law.

Uber and its peers have said that the law would force them to make drivers work pre-scheduled shifts, robbing them of the flexibility they currently enjoy. Uber has said it would be able to hire just a fraction of its more than 200,000 drivers. Mr. Khosrowshahi on Tuesday said prices for consumers would rise between 25% and 100%.

“These are not made-up estimates,” he added.

Uber’s core ride-hailing service has been battered during the pandemic, while its smaller food-delivery business has soared. Global rides volume was down 50% year-over-year last month, Mr. Khosrowshahi said, with Hong Kong leading its recovery.

Uber’s food-delivery bookings more than doubled in the second quarter of the year, and Mr. Khosrowshahi said the business continues to see growth “well over 100%.”

Uber reports third-quarter results on Nov. 5, days after the election.

Updated: 10-29-2020

California Prop 22 Vote Heralds Judgment Day For Uber, DoorDash

The initiative would exempt app-based companies from having to classify contractors as employees.

The gig economy is preparing for a reckoning. California voters are set to pick sides during the Nov. 3 elections in one of the most fraught debates of today’s labor market: Are flexible working arrangements worth the trade-offs of weaker job security and fewer benefits?

A state ballot measure, known as Proposition 22, would exclude app-based companies from California’s new gig economy law, which makes it tougher for companies to classify workers as contractors rather than employees.

If voters reject the proposition, the companies would have to start treating drivers as staff who are eligible for benefits such as guaranteed minimum wages, paid sick days, and other standard protections.

Ride-hailing apps Uber and Lyft and food delivery services DoorDash, Instacart, and Postmates sponsored the initiative, pouring a record $200 million into the campaign to convince voters that app-based drivers want to preserve their freedom and that an employee-based model would raise costs for customers.

The outcome—while legally binding only in California—could have ramifications across the U.S., potentially influencing states looking to tighten regulation of the gig economy, which has thrived in the era of app-based work. Lawmakers from New York to Illinois who are also rethinking labor laws for gig and freelance workers may take a cue from California’s handling of Prop 22.

App-based companies have propelled “this longer-term trend away from stable full-time employment,” says Juliet Schor, a professor at Boston College who studies gig workers. “The dangerous thing about it is, the bigger this gig economy is and the more it undermines protections for workers, the more likely you see the reduction of those stable, secure jobs.”

The stakes are high in California, where the gig economy has been a driver of economic growth and an often-mimicked business model for many technology companies based in Silicon Valley. A study by the U.S. Bureau of Labor Statistics estimates 10% of American workers now take part in “alternative work arrangements.”

These include temp agency and on-call workers, though most economists can’t even agree on a formal definition of gig work, let alone on the size of its contribution to the workforce. The Federal Reserve says 31% of adults age 18 and older participate in the gig economy, at least for supplemental income.

In academia, researchers at the sister institutions University of California at Riverside and UC Berkeley are feuding via papers and rebuttals over how to calculate hourly earnings: Should the time in which drivers are waiting for rides count, or not?

The ballot measure promises to be a nail-biter. While an early August poll from London-based consulting firm Redfield & Wilton Strategies showed “yes” leading “no” 41% to 26%, 34% of voters were still undecided. In a survey by UC Berkeley released on Oct. 26, the “yes” and “no” sides were close, at 46% and 42%, respectively, with the rest of respondents saying they’re unsure.

Gig platforms are highlighting worker freedoms that they argue come with contractor status. They say Prop 22 will allow workers to keep their flexibility, while also introducing extra measures such as health insurance stipends and regular background checks and safety courses for drivers.

Most important, it will maintain a way for hard-up workers to get quick cash during a job-crushing pandemic. Uber Technologies Inc. Chief Executive Officer Dara Khosrowshahi describes Prop 22 as the “best of two worlds.”

Uber estimates that redefining workers as employees could double the price of rides and may force the company to reduce its driver base in California. That’s assuming the companies stay—Uber and its rival Lyft Inc. have previously threatened to shut down in California, or parts of it, if they’re forced to change.

Drivers and labor advocates on the “no” side, which has raised only $20 million to promote its views, say the ballot initiative is a way for well-funded tech companies to buy themselves favorable legislation and fend off related lawsuits.

They argue that Prop 22’s pledged benefits are tied to driving time, which doesn’t account for the hours drivers spend waiting for a ping, shuttling to and from more lucrative cities to work, and disinfecting their cars.

The companies get an advantage from drivers who are waiting to pick up passengers so that the service can be deemed “on-demand,” says Kurt Nelson, an Uber engineer who wrote an op-ed against Prop 22 in October—disagreeing with his employer’s view. “Workers are subsidizing the product with their free labor,” he wrote.

If those workers had to be paid for waiting time, it would limit the number of drivers on the road at any given moment.

“Why Would You Kill An Industry That Employs So Many Individuals?”

If California voters reject the measure, “the company will have a powerful economic interest to put as much of the work hours into the fewest number of drivers possible because payroll taxes are per head, not per income,” says Bill Hamm, an economics consultant with Berkeley Research Group.

The barrage of “Yes on 22” messages from gig platforms has become more frenzied as the election nears. Uber’s in-app map shows little “Yes on 22” bubbles hovering over the car icon, and DoorDash Inc. said in a filing that it spent $100,000 distributing takeout paper bags adorned with “Yes on 22” to restaurants that use its service. “I choose to be an independent contractor.

It provides the flexibility I need in my life,” an Instacart Inc. worker wrote in a marketing email to customers. A group of “no” proponents in late October dropped banners over four busy freeway overpasses in Sacramento, the state capital.

In Los Angeles, a group of clergy rallied at City Hall to support the proposition on Oct. 22. Reverend K.W. Tulloss, one of the participants, says the measure will help protect drivers, especially minorities and poor people who may rely on gig work.

He acknowledges that the same rationale could be used to argue against Prop 22 and for increased benefits, but he stands by his position: “If drivers want to remain independent, why can’t we hear their voices?” Tulloss says he drove for Uber for three months a couple of years ago when he was between jobs:

“I knew what I was signing up for. Why would you kill an industry that employs so many individuals? Especially now, when people are being laid off from their jobs.”

Gig economy workers are split on whether they’re satisfied with the flexibility—largely based on whether the work is their primary source of income, says Boston College’s Schor. She found that occasional workers tend to earn more per hour and get benefits from another job or a spouse.

Those who were working full time and dependent on gig income felt more trapped. Over the past few years, the latter group has become a bigger slice of the workforce, she says. As the pandemic has crushed jobs in retail, restaurants, and other service industries, even more people are turning to gig work. But the crisis has also shone a bright light on the precarious nature of a job that has few guarantees, like paid sick days.

Prop 22 was born out of a California bill known as AB5 that was passed into law last year and took effect in January, which sets higher standards for workers to be classified as independent contractors. The proposition, if passed, would become nearly untouchable. State lawmakers could make tweaks to it, but any attempt to overturn or drastically change it would have to be approved by voters in another election.

If the ballot measure fails, Uber, Lyft, and others aren’t likely to give up. “They could just keep trying to write another bill that would carve them out of the law,” says Veena Dubal, a law professor at UC Hastings.

The companies have already been shaping how workers and voters view labor force regulations, Dubal says. “The idea that flexibility is tied to independent contractors’ status is cultural work the companies have done,” she says.

Vivian Marlene Dunbar, a 72-year-old retiree, is a Lyft driver in San Ysidro, Calif. She says she’s “totally dependent” on her gig work to cover rent and make ends meet. Even then, she’s not interested in benefits that might help ease her financial worries.

She’s supporting Prop 22. Job flexibility is “invaluable” to her, she says. “If I want to go out there and get a regular wage job with wonderful benefits, I would be at Costco or Sam’s Club, like other seniors,” she says. “But this is our choice. If I want to go sit under the apple tree and wait for a ride, I can do that.”

Updated: 11-4-2020

Uber, DoorDash Gig Worker Victory In California Sets Tone For Other Fights

The companies plan to lobby for national legislation on the California model, which provides drivers flexibility and some benefits.

Gig-economy companies including Uber Technologies Inc. UBER 14.59% and DoorDash Inc. won passage of a California ballot measure protecting their contract-worker systems, a major victory the companies hope will help them beat back challenges to their business models elsewhere in the U.S. and beyond.

After a decade of robust growth, ride-share and food-delivery companies have spent the past couple of years reckoning with efforts by policy makers and labor advocates to reclassify drivers as employees rather than as independent contractors. Late Tuesday, one of the biggest fights, in one of the companies’ biggest markets, went in their favor: They don’t have to change a thing.

California lawmakers had argued that drivers should be entitled to employee-like benefits such as a minimum wage, paid sick leave and unemployment assistance. The money-losing companies opposed a reclassification, saying it would force part-time workers to conform to pre-scheduled shifts, robbing them of the flexibility that they currently enjoy.

The outcome allows the ride-hailing and delivery companies—including Lyft Inc., Postmates Inc. and Instacart Inc.—to avoid complying with a California law that would have reshaped the way they operate in the most populous U.S. state. It also sets the tone for gig-worker regulation in the rest of the country.

The California fight has led to changes in the way companies treat drivers. In their effort to win popular support for the ballot measure, the companies offered to guarantee some new protections to the freelance workers their businesses rely on.

The companies told voters they would provide health insurance for drivers who work 15 hours or more a week, occupational-accident insurance coverage and 30 cents for every mile driven, among other protections. Opponents of the measure said those benefits fall short of those awarded to full-time employees.

The companies say the result benefits drivers and consumers: They have conceded some benefits, while the drivers can continue to remain part-time. People familiar with the companies’ plans say they plan to lobby for national legislation on the back of the California model.

The outcome “is an important turning point for this conversation,” Lyft President John Zimmer told The Wall Street Journal on Wednesday. “Now, we’re looking ahead and across the country, ready to champion new benefits structures,” DoorDash Chief Executive Tony Xu said in a statement.

Uber, Lyft, DoorDash, Postmates and Instacart together pushed the most expensive ballot measure in the history of California, spending nearly $200 million to convince voters to exempt them from reclassifying their drivers as employees. State voters overwhelmingly ruled in favor of the exemption.

Labor advocates worry that similar ballot measures could become the norm and that states would be dwarfed by the financial resources the companies can marshal behind their cause.

“It will certainly have a chilling effect on other states,” said Meera Joshi, New York City’s former Taxi and Limousine Commissioner. “You had the companies sending personal emails, text messages to all drivers, rides. And then they have the financial power to repeat that messaging in a marketing-savvy way,” Ms. Joshi said.

In July, Uber made a last-ditch appeal to the U.K. Supreme Court to overturn a series of court decisions that its British drivers were entitled to certain worker benefits. A decision is pending. The same month, Massachusetts sued Uber and rival Lyft for failing to provide employee-like benefits to its drivers. Other U.S. states, including Washington and New York, have threatened similar action.

Analysts say the companies needed a decisive win in their home state to send a strong signal to regulators elsewhere. “That’s why they spent so much. This wasn’t about California alone—they knew the ripples of it would be felt everywhere,” said RBC Capital Markets analyst Mark Mahaney. Investors “recognize that this is a broader win,” he said.

Uber shares closed up nearly 15% on Wednesday; Lyft shares closed up 11%.

The win comes as Uber and Lyft’s core ride-hailing business has been ravaged by the pandemic. Lyft’s Mr. Zimmer said on Wednesday that business is down 50% year-over-year, though recovering from the 75% low at the height of the pandemic. Uber Chief Executive Dara Khosrowshahi said at a Wall Street Journal conference last month that global rides volume was also down 50% year-over-year. Uber reports third-quarter results Thursday; Lyft reports next week.

Meanwhile, food-delivery has been a bright spot during the pandemic. Mr. Khosrowshahi said last month that bookings were growing “well above 100%.” Rival DoorDash is expected to go public later this year.

Updated: 1-7-2021

Gig-Economy Companies Get Worker Flexibility From Trump Administration

New rule makes it easier to classify workers as independent contractors, a win for Uber, Lyft, DoorDash.

The Trump administration made it easier for businesses to classify workers as independent contractors, a victory for gig-economy companies such as food-delivery and ride-sharing services and a counter to a California law that did the opposite.

The Labor Department in a final rule released on Wednesday would make it more difficult for a gig worker, such as an Uber or DoorDash driver, to be counted as an employee under federal law. That means those workers wouldn’t be covered by federal minimum-wage and overtime laws, and they could be responsible for paying the employer portion of Social Security taxes.

The rule won’t go into effect until March 8, after President-elect Joe Biden is inaugurated on Jan. 20. Biden spokeswoman Jen Psaki last week, in a press briefing, pointed to the then-pending independent contractor rule as an example of the type of last-minute regulation Mr. Biden would seek to halt or delay with a memo he intends to sign on inauguration day. She said the rule would make it easier for companies to misclassify employees.

Flexible work is overwhelmingly preferred by those who choose to earn on gig-economy platforms such as Uber, Danielle Burr, Uber Technologies Inc.’s head of federal affairs, said Wednesday.

“Forcing a binary choice upon workers—to either be an employee with more benefits but with less flexibility, or an independent contractor with limited protections—is outdated,” she said, noting Uber has offered additional benefits to drivers. “We appreciate the efforts made to modernize our nation’s laws.”

The Labor Department’s action follows a 2019 California law that required businesses to reclassify many contract and gig workers as employees, giving those workers access to the state’s minimum wage and overtime laws, workers’ compensation coverage and paid sick days. In November, California voters approved a ballot proposition that exempted Uber, Lyft Inc., DoorDash Inc. and similar companies from the law, which would have reshaped their business model.

DoorDash said the food-delivery company is committed to ensuring its workers can maintain flexible earnings opportunities. The vast majority work fewer than 10 hours a week, or an average of four hours a week or less. “We’re eager to continue working with lawmakers across the political spectrum at both the state and federal level,” a DoorDash spokesman said.

The rule “respects the time-honored American tradition of being your own boss,” Deputy Secretary of Labor Patrick Pizzella said. He said the California law had skewed the definition of an independent contractor, and added the new federal rule would increase opportunity for gig workers, and give them greater control over their lives.

A separate Labor Department official said states aren’t required to follow the federal rule, but the department hopes the rule can be a model for states.

“There will be efforts in several states to pass laws for which the Labor Department rule will be the basis,” said Michael J. Lotito, co-chairman of law firm Littler Mendelson P.C.’s Workplace Policy Institute and an attorney who represents businesses. Other states have used aspects of California’s laws as a model.

Labor unions, taxi drivers and workers’ advocates were among those who wrote letters protesting the plan, saying employees often have access to benefits, including health insurance and retirement plans, that independent contractors don’t have.

“The rule gives license to employers to call most of their workers independent contractors,” said Catherine Ruckelshaus, general counsel at the National Employment Law Project, which advocates for low-wage workers. “That would dramatically narrow worker protections…in the jobs that particularly need them, including construction, agriculture, janitorial and delivery jobs.”

Ms. Ruckelshaus said NELP is ready to challenge the rule in court, but added that might not be necessary, depending on the actions of the Biden administration.

Business groups, including the Chamber of Commerce, Associated Builders and Contractors and National Federation of Independent Business, also backed the rule, which they say provides greater clarity to a labor law passed in the 1930s.

Updated: 6-25-2021

Uber, Lyft Drivers Race To Apps That Make Contract Work A Better Gig

Adoption of apps to track pay, events and dispute complaints is soaring amid patchwork of regulatory efforts.

Drivers for Uber Technologies Inc., Lyft Inc. and DoorDash Inc. are flocking to a wave of apps designed to make gig work a better gig.

One app tracks weather patterns, aggregates drivers’ earnings from multiple platforms and steers them toward more lucrative locations by keeping tabs on events and foot traffic at airports. Another transforms drivers’ phones into dash cams, footage from which can be used to dispute passenger complaints.

Gridwise Inc., the app that collates drivers’ earnings across platforms, said its downloads more than doubled in May compared with the same month in 2019. The Pittsburgh-based app, founded in 2017, said it has more than 140,000 active monthly users. New York-based Driver Technologies Inc., which started its dashcam app in 2018, said it saw 10 times more downloads in the same period. It has about 50,000 active monthly users, at least a third of which it estimates are gig workers.

Downloads of the apps are outstripping pre-pandemic levels as the U.S. reopens amid a patchwork of regulatory efforts that catapulted workers’ rights to the fore last year.

Many workers banded together to rally for better protections and drove awareness about tools that drivers could use to boost earnings, track expenses and hold companies accountable when something goes wrong.

The surge in downloads comes despite a nationwide shortage of drivers that Uber and Lyft say they are contending with as the health crisis wanes and demand picks up. These apps are free and most earn revenue by selling location data and insights to city planners and insurers, among others.

Uber and Lyft pioneered on-demand gig work, but the companies don’t directly employ those workers. While many drivers want to remain independent, they say they also want more information on compensation, better tools to maximize earnings and guidance on how to manage issues such as wrongful terminations or complaints.

Rideshare and food-delivery companies acknowledge that third-party apps can help. A Lyft spokeswoman said that while the company arms drivers with earnings and other data, “third-party apps can aggregate information from numerous platforms and provide a more holistic view of someone’s activity,” adding that those insights “are a good thing, regardless of whether they come from Lyft or from another group.”

Some apps are equipping drivers with the evidence needed to defend themselves and pointing them to legal aid.

Antonio Zermeno started using Driver, the dashcam app, a few months ago. The app uses the phone’s rear camera to record the road and the front camera to film the interior of the car.

Mr. Zermeno said the footage gives him a sense that he can advocate for himself in case of traffic incidents or rider complaints.

While ferrying an Uber passenger last month, a car jumped a red light and damaged Mr. Zermeno’s bumper. The app connected him to LegalRideshare LLC, a law firm in Chicago that guided him on using accident footage to file a claim with Uber at no cost. Mr. Zermeno expects to receive some compensation from Uber because the accident involved a rider.

In addition to recording, the Driver app can transform the phone’s back camera into a driving assistant, said founder Rashid Galadanci. The front camera is powered with facial-recognition technology that can warn drivers if their “eyes are closing or their head dipping” for additional safety, he said. Mr. Galadanci said regular car owners also use those features.

Lawmakers in the U.S. and elsewhere have sought to reclassify ride-share and food-delivery drivers as employees to force companies to build more support infrastructure. The companies fought those attempts, winning some big battles including in their home state in California late last year, and losing others, such as in the U.K. this year.

A DoorDash spokesman said it is working to improve its couriers’ experience and has struck partnerships with companies that offer discounts on automobile repairs and assist with tax preparation, among other things.

Uber said its partnerships also help drivers with taxes. The company has a guidebook for new drivers and virtual tutorials that can help them navigate issues such as complaints and accident claims.

Drivers themselves have taken to building an ecosystem that helps their peers navigate the challenges and quirks of being an app-based worker.

Drivers for Uber Technologies Inc., Lyft Inc. and DoorDash Inc. are flocking to a wave of apps designed to make gig work a better gig.

Downloads of the apps are outstripping pre-pandemic levels as the U.S. reopens amid a patchwork of regulatory efforts that catapulted workers’ rights to the fore last year.

Mr. Zermeno said Driver-app footage could help him if there is a traffic incident or rider complaint.

Some apps are equipping drivers with the evidence needed to defend themselves and pointing them to legal aid.

Antonio Zermeno started using Driver, the dashcam app, a few months ago. The app uses the phone’s rear camera to record the road and the front camera to film the interior of the car.

Mr. Zermeno said the footage gives him a sense that he can advocate for himself in case of traffic incidents or rider complaints.

Uber said its partnerships also help drivers with taxes. The company has a guidebook for new drivers and virtual tutorials that can help them navigate issues such as complaints and accident claims.

Drivers themselves have taken to building an ecosystem that helps their peers navigate the challenges and quirks of being an app-based worker.

Amid a patchwork of regulatory concerns about the employment status of gig workers, drivers for Uber, Lyft and others are flocking to apps that help them do things like track pay and dispute customer complaints. Reporter Preetika Rana joins host Amanda Lewellyn to discuss what’s behind their rise.

“Gig workers are really taking matters into their own hands and using any and every tool to take control,” said Hays Witt, co-founder of Driver’s Seat Cooperative, a gig-worker-owned group that in late 2019 launched an app to help drivers track expenses such as gas and mileage.

The app gives drivers a more accurate picture of their mileage by also recording the time they spend driving to pick up passengers. Tracking mileage is important because it helps drivers save tax dollars. Uber and Lyft log only the miles during a ride. Driver’s Seat said its app downloads doubled this May compared with February last year, before widespread lockdowns swept the U.S. It said the app is used by 2,000 drivers.

UberCheats was launched last year by a software engineer who became a food-delivery driver. The web tool pulls the GPS coordinates of trips from drivers’ monthly statements and uses Google Maps to calculate the distance between pickup and drop-off locations. Drivers can use it to match it with the distance Uber paid them for.

Former navy officer Ryan Green, co-founder of the earnings aggregator app Gridwise, came up with the idea after driving for Uber during off-duty hours while stationed at a military base in Pensacola, Fla. “Fairly quickly, I was exposed to the pain points that drivers were dealing with,” he said.

He launched Gridwise after subscribing to some 30 services offering information such as weather conditions and airport traffic and sending that data to drivers. The app tracks events in more than 80 cities, including New York, San Francisco and Los Angeles. Drivers can see their combined earnings across platforms by linking each of their accounts to the app. The company has raised $5.6 million from venture-capital firms including Switch Ventures.

Los Angeles-based gig worker Ben Valdez likes that Gridwise keeps him informed about big events and tracks his activity across platforms. “So you don’t have to write it down in a book. They do it all for you,” he said.

He experimented with a Driver-like dashcam app, but found that it was better suited for drivers with an extra handset because it overheated his phone. “It’s about adjusting your strategy through trial and error,” Mr. Valdez said.

Updated: 8-19-2021

Uber And Lyft Threaten California Shutdown: Here’s What’s At Stake

A key decision in the debate over how to classify drivers is expected this week, and the ramifications could be world-wide

Uber Technologies Inc. and Lyft Inc. have said they may suspend their ride-hailing operations in California as soon as Friday, escalating a high-stakes battle with their home state over how their drivers should be classified.

California sued the companies in May, alleging they were violating a new state law that requires companies to treat workers as employees rather than independent contractors if they are controlled by their employer and contribute to its usual course of business, among other things. As employees, drivers would be eligible for sick days and other benefits, issues that have become more pressing during the coronavirus pandemic.

Uber and Lyft, both based in San Francisco, have argued that they are technology platforms connecting riders with drivers, not transportation companies, so the drivers aren’t part of their usual course of business.

A state judge agreed with California last week and gave the companies until Friday to reclassify their drivers as employees. The companies appealed the decision and requested the judgment be paused while it is being challenged. But unless an appeals court decides to stay the ruling, the deadline stands.

Uber Chief Executive Dara Khosrowshahi and Lyft President John Zimmer have said they would rather suspend operations in the state than upend their businesses overnight. Residents of California will be able to express their opinion through a ballot initiative in the November election that asks voters to exempt Uber and Lyft from the law at the heart of the continuing dispute.

Both companies argue that the reclassification will require drivers to work prescheduled shifts, robbing them of the flexibility they currently enjoy. The companies say they would be forced to consolidate their fleet to fewer drivers who work more hours a week; drastically reduce their footprint in the suburbs, where demand is spotty; and raise prices for rides to offset the new costs associated with recruiting, monitoring and managing driver operations.

The stakes are high either way. Suspending ride-share in California, which accounted for 9% of Uber’s rides world-wide and 16% of Lyft’s before the coronavirus pandemic, would deal another blow to a business ravaged by the health crisis. Uber reported a 75% year-over-year drop in rides in its second quarter; Lyft’s active riders fell by more than half over the same period.

Complying with the order, though, would undermine the economics of ride-hailing, transforming Uber and Lyft into traditional taxi operators at a time when they are struggling to turn a profit. It could also set a precedent for legal battles playing out elsewhere in the U.S. and around the world. Massachusetts is suing Uber and Lyft over alleged driver misclassification, and Uber drivers in Europe have filed legal complaints seeking broader employment benefits.

Uber and Lyft assert that shifting to an employment model would force them to pick fewer drivers who conform to a 40-hour workweek, the standard for full-time U.S. employees. Uber says fewer than 2% of its more than 200,000 drivers in California use its app for 40 hours or more a week; Lyft says 86% of its more than 300,000 drivers in the state drive fewer than 20 hours a week.

For the reclassification to be economically viable, Uber would be able to hire just over 50,000 drivers, or one-quarter of its existing drivers, according to company economist Alison Stein. At the same time, the company estimates that it would need to spend millions of dollars to build a framework to monitor drivers, including tracking their meals and rest breaks, and hire additional staff to oversee day-to-day operations. Those costs, the company said in a legal filing, would push prices for rides to increase between 20% and 120%.

Uber added that it would need several months to build such a framework, making such a reclassification impossible this week. Lyft also said that it “cannot restructure its business at the flip of a switch,” pressing the court for a stay as it argues its case.

If the appeals court gives the companies more time, the question will be for how long. Uber and Lyft have their sights set on the November ballot initiative, which would supersede any ongoing litigation if it passes.

Under the ballot measure, the companies also would guarantee certain protections to workers that currently don’t exist, such as giving drivers 30 cents a mile driven to account for gas and other vehicle costs, health-care subsidies for drivers who work 15 hours or more a week and occupational-accident insurance coverage while on the job.

Critics say those protections fall short compared with the benefits awarded to full-time employees. For instance, the standard Internal Revenue Service mileage rate that employers typically use to reimburse employees is 57.5 cents a mile.

“It doesn’t make any sense why these workers should have to battle it out for each labor protection one by one when we have a full web of protections” for employees, said Shannon Liss-Riordan, a labor attorney who represented drivers in one of the earliest misclassification suits against Uber and Lyft in 2013. “For the companies to say they will need to figure everything from scratch overnight is ridiculous. We’ve been in court for years and when California stepped in with a law this year, they knew the hammer was going to fall on them soon. Why weren’t they prepared for this before?”

Uber and Lyft said they are exploring alternatives that might allow them to circumvent the ruling in the near term. One idea involves licensing their brands to operators of vehicle fleets. Under that model, drivers would earn a predetermined hourly wage. The fleets would monitor and enforce drivers’ activity, allowing the companies to stay at arm’s length.

Uber spokesman Noah Edwardsen said, however, that “we are not sure whether a fleet model would ultimately be viable in California.”

While some drivers have expressed a desire to keep the current model because they can pick up work when they need or want to with no strings attached, others would welcome the protections offered by California’s so-called gig-worker law. Ultimately, many of them say, their livelihoods are on the line.

“They’re playing with people’s lives threatening a shutdown. I’m scared I’ll have to find another source of income,” said Jerome Gage, who drives full-time for Lyft in Los Angeles and is an active member of the Mobile Workers Alliance that is supporting the reclassification of drivers as employees. “They treat us like it’s all about them and their bottom line.”

Updated: 8-20-2021

California Ballot Measure That Classifies Uber, Lyft Drivers As Independent Ruled Unconstitutional

Proposition 22, which passed in November, was the most expensive such measure in the state’s history.

A California judge said the November ballot measure that allowed Uber Technologies Inc., Lyft Inc. and DoorDash Inc. to continue treating their drivers as independent contractors is unenforceable and unconstitutional.

The companies, which spent more than $200 million to pass Proposition 22 in November, said they would appeal the ruling.

The companies don’t need to immediately change their way of doing business, but Friday’s ruling adds a wrinkle in their efforts to preserve their independent-worker models and serves as a setback in their yearslong fight against the California law at the heart of the ruling.

Uber and other companies are in a global tug of war with regulators over whether and how to grant more benefits like paid sick leave and health insurance to workers in the so-called gig economy, where apps distribute individual tasks to a pool of people who are generally regarded as independent contractors.

California sued the companies last year, saying they were in violation of the state’s so-called gig law because none of them reclassified their drivers as employees after the statute went into effect in 2020. A high-stakes legal battle ensued, culminating in Proposition 22, in which the companies asked state voters to exempt them from the law.

Uber, Lyft, DoorDash and Instacart Inc. promised workers flexibility, alongside some benefits, if the ballot measure passed. Opponents of the measure said those benefits fall short of those awarded to full-time employees. California voters passed the measure with an overwhelming majority.

Superior Court Judge Frank Roesch said in Friday’s ruling that Proposition 22 limits the state legislature’s authority and its ability to pass future legislation, which is unconstitutional.

“We believe the judge made a serious error by ignoring a century’s worth of case law requiring the courts to guard the voters’ right of initiative,” said Geoff Vetter, a spokesman for the companies’ Proposition 22 campaign. “This outrageous decision is an affront to the overwhelming majority of California voters.”

Friday’s ruling came after a group of ride-share drivers and labor unions challenged the constitutionality of the ballot measure in February.

“Today’s ruling by Judge Roesch striking down Proposition 22 couldn’t be clearer: The gig industry-funded ballot initiative was unconstitutional and is therefore unenforceable,” said Bob Schoonover, the president of SEIU California State Council, one of the labor unions involved in the lawsuit. The companies “tried to boost their profits by undermining democracy and the state constitution,” he added.

Proposition 22 was the most expensive ballot measure in the history of California. It allowed the ride-hailing and delivery companies to avoid complying with a law that could have reshaped their business models and battered their business in the most populous U.S. state. The effort to win popular support led the companies to guarantee new protections.

The companies now offer health insurance for drivers who work 15 hours or more a week, occupational-accident insurance coverage and 30 cents for every mile driven, among other protections.

The win in California set the tone for gig-worker regulation in the rest of the country. Uber, Lyft, DoorDash and Instacart have joined forces for a Proposition 22-like ballot in Massachusetts next year.

Uber, which has a larger global footprint, has had to make concessions outside the U.S. It agreed to grant its U.K. drivers an employment status entitling them to vacation pay and pension contributions after exhausting its legal options in March.

California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,California Sues Uber, Lyft,