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Gig Companies Go It Alone As They Launch ‘Dynamex’ Measure For California’s November Ballot

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Ever since the California Supreme Court’s “Dynamex” ruling last year set a new test for when a worker is considered an employee, gig companies have tried to exempt their drivers and keep them classified as independent contractors.

Now, after failing to win that exemption in the Legislature, they’re turning to voters.

Uber, Doordash and other “gig economy” companies took the first formal step toward what they’ve pledged will be at least a $90 million campaign fight Tuesday by submitting a potential November 2020 ballot measure to the Attorney General’s office.

“We’re trying to pair independent contractor status, and the flexibility that’s inherent with it, with what we believe — and the drivers behind us believe — is a fair package of economics,” campaign spokesman Brandon Castillo said at a news conference that included Sacramento area gig economy workers.

A coalition of labor unions formed to oppose the measure accused the gig companies of trying to “buy democracy away from drivers” and “cling” to an “exploitative business model.”

The initiative promises new benefits, such as a wage floor and health care subsidies, but doesn’t include social security or the right to unionize.

That would appear to leave wiggle room for a potential compromise with organized labor in the coming months — something the gig companies say they’re open to. Under state law, initiative proponents have until late June to withdraw their ballot measure if an agreement is reached in the Legislature.

The narrowly tailored — and retroactive — ballot proposal would only apply to app-based rideshare and delivery drivers. In addition to Uber, Lyft and DoorDash, Instacart is on board and Postmates likely will be too.

But those companies’ drivers are split, and each side is putting forth its own examples.

Lynn Reagan says she needs the flexibility as an independent contractor to care for her four grandchildren, because their mother is on bed rest.

“If this was taken away, it would devastate me, because there’s no job out here that I can get — especially at my age — that’s gonna allow me to come and go as I need to do,” she said at Tuesday’s news conference in favor of the ballot measure.

But another Sacramento-area driver, Jeff Perry, says he checked the math — and the ballot measure would cut his pay. He argues the only path to fairness is to make workers like him full employees.

“Drivers are saying, ‘This is poverty, we’re struggling,’ right? And then they come and they cut the pay and then they put a nice name on it, really pretty name, fancy, right? Commit the $90 million, but they don’t tell the real story behind it,” he said. “And the real story behind it is, this is a pay cut.”

The ballot measure responds to the law signed last month codifying the California Supreme Court ruling. The law, AB 5 by Asm. Lorena Gonzalez (D-San Diego), exempts some industries, including doctors and hair stylists. But it left out drivers for gig companies and workers in more established industries such as truckers and janitors.

That spurred criticism during the legislative debate that the bill ought not to pick winners and losers.

But because the ballot proposal would only apply to app-based rideshare and delivery drivers, the gig companies are doing the same thing, leaving other industries on their own once again. 

“The narrow scope of this initiative does not address the 70,000-plus independent owner-operator truckers, nor the hundreds of thousands of other independent contractors, who were not exempted from the ABC test in AB 5,” California Trucking Association CEO Shawn Yadon said in a statement, which referred to the three-pronged legal standard that determines whether a worker is an employee or not.

Indeed, a major question after the gig companies vowed to take their effort to voters was whether they would form a broader coalition or go it alone.

The disadvantage for the gig companies of going their own way is they will need to foot the entire campaign bill themselves. But the advantages are many: They could write the ballot measure however they want, they can control the message during the campaign, and they’ll only have to defend their own baggage.

Besides, they have no shortage of money. In addition to Uber, Lyft and Doordash, which each pledged $30 million to the campaign last month, Instacart is now on board — and Postmates is expected to join soon as well.

The California Dream series is a statewide media collaboration of CALmatters, KPBS, KPCC, KQED and Capital Public Radio, with support from the Corporation for Public Broadcasting, the James Irvine Foundation and the College Futures Foundation.


CapRadio provides a trusted source of news because of you.  As a nonprofit organization, donations from people like you sustain the journalism that allows us to discover stories that are important to our audience. If you believe in what we do and support our mission, please donate today.


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As Congress scrutinizes gig worker rules, small-business owners need to know the basics – The Philadelphia Inquirer

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Uber’s UK ruling could have implications for gig economy startups

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Former Uber drivers Yaseen Aslam and James Farrar first brought their case against Uber in 2016
(Carl Court/Getty Images)

The UK’s Supreme Court has rejected Uber‘s appeal against an earlier ruling that said its drivers must be classified as workers, a result that may have a significant impact on other gig economy companies.

The decision—which cannot be appealed—means thousands of UK Uber drivers cannot qualify as being self-employed, entitling them to both minimum wage and holiday pay. The ridehailing company could now face paying substantial compensation to its drivers.

The ruling, which criticized Uber for sidestepping UK labor laws to withhold benefits, could influence other battles between gig workers and the companies that hire them. Earlier this month, the Independent Workers’ Union of Great Britain appealed against a court decision preventing riders for food delivery startup Deliveroo from engaging in collective bargaining due to their self-employed status. Deliveroo, which is backed by investors including Durable Capital Partners and Amazon, is looking to go public this year.

“Employees should benefit from improved rights; however, employers are likely to face increased costs of labor and disruption to their business models, which have proven to achieve rapid scale with gig workers,” said PitchBook analyst Nalin Patel. “The ruling may also now set a precedent in the UK and force other gig economy startups that utilize the self-employed contractor model to rethink how they operate in the region moving forward.”

Former Uber drivers James Farrar and Yaseen Aslam originally won their tribunal against Uber in 2016. Uber appealed the decision, but it was upheld in 2017, and again in 2018 by the High Court.

“This ruling will fundamentally re-order the gig economy and bring an end to rife exploitation of workers by means of algorithmic and contract trickery,” said Farrar, who is also a general secretary with the App Drivers and Couriers Union. “Uber drivers are cruelly sold a false dream of endless flexibility and entrepreneurial freedom.”

In a statement, Uber’s regional general manager for Northern and Eastern Europe, Jamie Heywood,  said the court decision was focused on a “small number of drivers” who used the app in 2016. Since then, he said the company had made changes to its business,  providing free insurance in case of sickness or injury. He added: “We are committed to doing more and will now consult with every active driver across the UK to understand the changes they want to see.”

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The future is now for gig-based entrepreneurship – San Gabriel Valley Tribune

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With Californian Kamala Harris as vice president, it’s clear the new Biden administration is taking its cues from the once-Golden State on labor policy.

In one of its first acts in office, the Biden Administration placed a regulatory freeze on a Department of Labor regulation enacted in the waning days of the prior administration relating to independent contractors.  The rule, according to labor and employment law firm Fisher Phillips, “aims to make it easier for businesses to classify workers as independent contractors.”

It’s unlikely this rule to give more workers freedom to be their own boss and set their own schedules will survive in a Biden administration that was heavily reliant upon labor unions for money and manpower to win the 2020 campaign.

Meanwhile, House Democrats recently re-introduced the controversial PRO Act in Congress, which “seeks to reduce the use of the independent contractor classification by companies such as Uber,” according to CNBC.

Both of these efforts followed the lead of California’s liberal legislative majority, which two years ago enacted the controversial Assembly Bill 5 to severely restrict the ability of Californians to work as independent contractors.  Their goal is to increase union membership and dues and force people to work in traditional, 9-to-5, union jobs that are relics of the past.

Doubling down on AB 5-type restrictions at the national level – which may be the Biden administration’s goal with the nomination of Julie Su, California’s chief AB 5 enforcer, as deputy Secretary of Labor – would be a tremendous mistake.  It would threaten innovation and hurt the ability of Americans who have lost their jobs to put food on the table during a global pandemic.

As documented in the new Pacific Research Institute study, “The Small Business Gig,” Americans are increasingly working in the gig economy.  They don’t want government – whether in Sacramento or Washington, DC – dictating how they can earn a living.

A 2018 Gallup survey found that 36 percent of U.S. workers have some sort of a gig worker arrangement.  Whether renting out an extra room to earn cash to pay the mortgage or using an app to earn a living on an alternate schedule, the gig economy is increasing opportunities for Americans to become entrepreneurs, while providing customers with lower cost services.

Many in California state government see the gig economy as exploitative and disruptive.  But data from the ADP Research Institute shows that 70 percent of gig workers are independent workers by choice.  Gig Economy Data Hub research found that more than two-thirds of gig economy workers are satisfied with their current work arrangement.

Government shouldn’t pick winners and losers in the economy.  New restrictions on the gig economy, like those proposed in Congress, will limit people’s freedom to become entrepreneurs while institutionalizing the old way of doing work.

Instead of adopting regulations at the federal level that 58 percent of Californians – Democrats, Republicans, and independents alike – rejected when they passed Proposition 22 in November, the Biden administration and Congress should take the opposite approach and enact market-based policies to encourage entrepreneurship and innovation.

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