Some Uber drivers in New York City want to see a decrease in the commission taken by the company.
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SAN FRANCISCO â€“ Gig economy workers are increasingly ubiquitous, shuttlingÂ usÂ to appointments and deliveringÂ our food while working for Uber, Lyft, DoorDash and others.
Thanks in large part to the app-based tech boom emanating from this city, 36% of U.S. workers participate in the gig economy, according toÂ Gallup.Â But not all gigsÂ are created equal, Gallup adds, noting that so-called contingent gig workers experience their workplace “like regular employees do, just without the benefits of a traditional job â€“ benefits, pay and security.”
That could soon change. California lawmakers are weighing what is considered a pro-workerÂ bill that, if passed into law, would set a national precedent that fundamentally redefines the relationship between workerÂ and boss by forcing corporations to pay up.Â
Big companies such as Uber and Lyft, as well as some workers concerned about losing the flexibility inherent in their gig jobs, have raised concerns about the bill. But supporters of Assembly Bill 5, which has passed the Assembly and awaitsÂ Senate approval before it can go before the desk of Democratic Gov.Â Gavin Newsom, say itâ€™s time to end an exploitative relationship and start providing better pay and some benefits to gig workers.Â
Assemblywoman Lorena Gonzalez, D-San Diego, author of AB 5, argues that flexibility can be retained while empowering workers.Â She says thatÂ without benefits ranging from health insurance to retirement planning, gig economy workers are left in a financially precarious situation in a state with growing levels of income disparity.
â€œWe have seen an alarming rate of misclassification of workers in California, which has led to worker inequality and burdened taxpayers through their support of government programs and tax credits,â€ says Gonzalez.
ThereÂ are many types of independent contractors, including real estate agents, freelance writersÂ and dancers. Some workers will be exempted under the proposed measure, such asÂ lawyers andÂ real estate agents.Â
Exotic dancers also are hoping for an exemption and have protestedÂ AB 5 in recent months around California, saying that they donâ€™t want to be classified as employees of a club and prefer their independent worker status.
But by far the biggest focus of AB 5 is on the growing number of folks who now drive for a living. And the nationâ€™s two giant ride-sharing companies, Uber and Lyft, have been among the most vocal opponents of the measure.
Thatâ€™s because in its current form, AB 5 would make law a set of standards codified by the so-called Dynamex decision reached by the California Supreme Court last year.
The ruling, which stemmed from a lawsuit by a gig-economy driver against a same-day courier company, says an independent contractor has to beÂ free from the companyâ€™s control,Â is doing work that isnâ€™t central to the companyâ€™s business andÂ has an independent business in that industry.
Ride share drivers, for example, are central to Uber and Lyft’s business models and generally do not ownÂ independent ride share operations. So the tech companies would be forced to change their classification system.
Some Uber drivers demand more pay, less flexibility
Uber and Lyft, valued at nearly $100 billion between them, have argued that being forced to make drivers theirÂ employees â€“ therebyÂ covering everything from health insurance to vacation time â€“ would jeopardize the fiscal health of the companies.
In fact, fueled by millions in venture capital, Uber and Lyft have for years subsidized the cost of rides to increase market share. Analysts say eventually ride costs for consumers will need to rise to deliver profits.
Rideshare drivers are passionate on both sides of this issue.
Sacramento resident Melody JonesÂ saysÂ driving for Lyft was a life-saver when her husband left her after she discovered she had breast cancer.Â
â€œI donâ€™t want to be forced to become an employee, because I have my own business as a personal trainer,â€ says Jones, who spoke about her reservations aboutÂ the measure on July 10 to the Senateâ€™sÂ committee on Labor, Public Employment and Retirement, which passed the bill.Â â€œLyft offered the perfect opportunity to provide extra income when I wanted to make it. I donâ€™t want Lyft to tell me when to drive.â€
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But Lyft driver Edan Alva of AlamedaÂ says he isn’t able to live off his earnings. HeÂ started driving about four years ago part time, â€œand that was semi-OK,â€ he says. When he lost his job he started driving upwards of 60 hours a week, but found the schedule grueling and the money scant.
â€œThere are weeks Iâ€™ll log 80 hours at the wheel, and maybe make $1,300 and thatâ€™s before paying for gas and maintenance on my car,â€ says Alva. â€œI want the company to give time off, sick days, to put something in a pension, all the benefits of a normal workplace because Iâ€™m working full-time here.â€
As for the vaunted flexibility of a ride-sharing driver job, Alva says simply, â€œwhen youâ€™re working 60 to 80 hours a week, there is no flexibility.â€
Giving workersÂ benefits would cost millions of dollars
Uber and Lyftâ€™s bossesÂ argued in a June 12Â San Francisco Chronicle op-ed pieceÂ that drivers demand the flexibility inherent in gig work but added that the companies would be willing to set aside funds to cover so-called worker-determined benefits that could include paid time-off to retirement planning. Representatives of both Uber and Lyft referred USA TODAY to the article when asked about AB 5 and declined to be interviewed.Â
Uber CEO Dara Khosrowshahi and Lyft co-founders Logan Green and John Zimmer wrote, â€œWe can work with the California Legislature to establish a commitment to driver pay and earnings transparency for the work performed.â€
In May, Barclays investment bank estimated thatÂ turning California drivers into employees could cost Uber $500 million a year and Lyft $290 million.Â
Dan Ives, who watches ride-sharing trends for Wedbush Securities, recently published a note saying that AB 5 represents a â€œclear long-term riskâ€ to Uber and Lyft.
â€œAt a high level, AB 5 is a torpedo to the gig economy,â€ says Ives. â€œThe business models of Uber and Lyft and many of these companies arenâ€™t built to define people as employees. There may well be unintended consequences when the economy is impacted by legislated issues such as this one.â€
Jennifer Barrera, executive vice president at the California Chamber of Commerce, the stateâ€™s largest business advocacy group, said companies and lawmakers should be able to work out a compromise.
â€œWe need to work on a third classification for our economy of today, one thatâ€™s not totally independent nor full-time,â€ she says. â€œIt has to be something that offers the flexibility people like, but with some worker protections.â€
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But Steve Smith, communications director for the California Labor Federation,which is a sponsor of AB 5, said workers deserveÂ more protections.
â€œGiving workers a few crumbs is not the reality weâ€™re in politically,â€ says Smith, whose organization represents 2 million California workers. â€œWe see AB 5 as the foundation on which we strengthen the rights of workers in the gig economy across the country.â€
Smith dismisses the notion that classifying drivers as employees would inherently eliminate the flexible nature of their job.
â€œThese companies pride themselves on innovation, so they can figure out how to make them employees and retain flexibility,â€ he says, adding that â€œpaying workers more isnâ€™t going to bankrupt them.â€
Labor lawyer William Sokol anticipates more legal wrangling before anything is etched into law. But he saysÂ a new day is dawning for gig workers in California, which could have a ripple effect beginning in other Democratic-leaning states such as Washington, Oregon, New York and Massachusetts.
â€œOption 1 is that weâ€™ll see more wheeling and dealing behind the scenes with representatives of Uber and Lyft, and maybe theyâ€™ll get an exemption of some kind,â€ says Sokol, who lectures on labor studies at San Francisco State University.
â€œOption 2 is that it passes, and then the real negotiating begins,â€ he says. â€œBut something will be signed by Newsom, and whatever it is it wonâ€™t be a free ride for Uber and Lyft. Weâ€™re at an inflection point.â€
Follow USA TODAY national correspondent @marcodellacava.
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