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As California Seeks Injunction on Gig Workers, Uber Says 158,000 Will Lose Jobs

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An Uber driver and her passengers. Photo courtesy of the company

California plans to ask a state court judge to force Uber and Lyft to classify their rideshare drivers as employees rather than contractors, ratcheting up the tension over the new gig worker law.

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Shares of both companies fell about 7%. A hearing for the matter was set for Aug. 6.

In a filing in the Superior Court of California in San Francisco on Wednesday, lawyers for California Attorney General Xavier Becerra said their office will file a request for a preliminary injunction.

“Misclassifying your workers as ‘consultants’ or ‘independent contractors’ simply means you want your workers or taxpayers to foot the bill for obligations you have as an employer — whether it’s paying a legal wage or overtime, providing sick leave, or providing unemployment insurance,” said Becerra in a statement. “We’re seeking a court order to force Uber and Lyft to play by the rules.”

The action comes under San Diego Assemblymember Lorena Gonzalez’ Assembly Bill 5, the new law that requires most independent contractors to become traditional shift employees, except in a handful of politically connected occupations like doctors and real estate agents.

Uber in a statement said most drivers preferred the independence afforded by working as contractors and that it calculated over 158,000 Uber drivers in California would lose work if the reclassification happened.

Lyft said that if the injunction is granted “it would have a devastating effect on millions of Californians at the worst possible time.”

The rideshare companies and DoorDash have funded a November ballot initiative that would exempt from Assembly Bill 5 any business using a mobile app to connect customers with drivers.

Stacey Wells, spokesperson for the coalition behind the ballot initiative, accused Becerra of pursuing “yet another malicious legal action against drivers that underscores exactly why we’re pursuing the ballot measure.”

“It is baffling that anyone would seek to end this critical work, threatening 900,000 jobs, especially now. Most drivers do so part-time — 80 percent drive fewer than 20 hours a week and most drive less than 10,” she said. “They’re overwhelmingly doing this to supplement income around other jobs and life responsibilities and wouldn’t be able to work as employees.”

San Diego City Attorney Mara Elliott, who has targeted gig economy company InstaCart locally, joined Becerra and the city attorneys of Los Angeles and San Francisco in supporting the injunction.

“It is time for Uber and Lyft to stop flouting the law and start treating their workers fairly by classifying them as the employees that they are,” said Elliott.

Gig economy companies say California labor laws make it difficult to allow employees to choose when and how much they want to work, requiring a traditional shift system instead, while Becerra says that is not the case.

Updated at 5:30 p.m. on Wednesday, June 24, 2020

— From Staff and Wire Reports

As California Seeks Injunction on Gig Workers, Uber Says 158,000 Will Lose Jobs was last modified: June 24th, 2020 by Chris Jennewein

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Labor of Law: McDonald’s Confronts Ousted CEO | New Gig Ruling in California | Covid-19 Headlines: Returning to Work | Who Got the Work

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Welcome to Labor of Law, our labor and employment dispatch on the big cases, issues and trends. We love your feedback. Please send thoughts and suggestions to Mike Scarcella at [email protected]. Follow Mike on Twitter @MikeScarcella. Thanks for reading!

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The extra $600 in weekly unemployment benefits expired — but gig workers and self-employed Americans still qualify for benefits

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For the first time during the pandemic, weekly jobless claims dipped below 1 million, but there are likely many more Americans who qualify for unemployment benefits who didn’t apply.

When the $2 trillion CARES Act passed in March, self-employed, independent contractors, gig workers and other nontraditional workers became eligible for unemployment benefits. Even though the federally-funded $600 a week in enhanced unemployment benefits, which was also part of the CARES Act, expired on July 31, these types of workers can still collect state-level unemployment benefits through the end of the year.


‘There is definitely a chance that the loss of the $600 is changing claimant behavior’


— Michele Evermore, a senior policy analyst at the National Employment Law Project

This nuance may have been lost in translation when the $600 benefit expired, said Michele Evermore, a senior policy analyst at the National Employment Law Project, an advocacy organization focused on workers’ rights.

“There is definitely a chance that the loss of the $600 is changing claimant behavior,” she said, meaning that unemployed workers may have wrongly assumed that they would no longer be eligible for unemployment benefits after July 31. A total of 10 million Americans have already been approved for unemployment benefits who otherwise would have been ineligible if not for the CARES Act, Evermore said.

Unemployment benefits are based on how much money a worker earned while they were employed. For traditional salaried workers, that amount gets automatically reported to state workforce agencies. But self-employed and gig workers often lack the ability to provide an exact net earnings amount, Evermore said.

“But if they can prove that they worked and got income or were offered a job and that job offer was rescinded due to COVID-19,” she said, they can collect what amounts to half of the average weekly unemployment benefit in their state.


In all 50 states and Washington D.C., the minimum amount is over $100 a week

In many cases that will enable them to collect more in unemployment benefits than they would if they had a traditional job where their earnings were reported automatically, Evermore told MarketWatch.

At a minimum, gig workers, independent contractors and other self-employed workers can collect the equivalent of the average weekly benefit in their state. In all 50 states and Washington D.C., the minimum amount is over $100 a week, according to the Department of Labor. That’s especially important because it means these types of workers will be eligible for an additional $300 a week under President Donald Trump’s executive order. (Anyone who gets at least $100 in unemployment benefits from their state would qualify for the extra $300.)

However, it could be some time before these workers actually get those benefits. State governors have said that state workforce agencies are not properly equipped to quickly implement the changes Trump’s executive order calls for.

Evermore said she hopes that Congress will consider extending the period of time gig and self-employed workers can collect unemployment benefits, but she is “worried we will reach a deadlock on this in December like we are seeing now with the $600.”

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DoorDash: Injunction In CA Over Gig Worker Status

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DoorDash, the San Francisco-based prepared food delivery service, could be the latest gig company to face an injunction to treat its workers as employees, not independent contractors.

The Financial Times reported San Francisco District Attorney Chesa Boudin has filed for a preliminary injunction against the country’s largest food delivery service that would require the company to reclassify its workers as employees.

“We are seeking an immediate end to DoorDash’s illegal behavior of failing to provide delivery workers with basic workplace protections,” Boudin said in a statement. “All three branches of California’s government have already made clear that these workers are employees under California law and entitled to these important safeguards.”

If Boudin’s request is approved by the court, the ruling would apply to DoorDash workers in California. A reclassification of workers would mean gig workers with healthcare benefits, sick pay, paid leave and other benefits not currently available to them.

“In the midst of one of the deepest economic recessions in our nation’s history, today’s action by the district attorney threatens billions of dollars in earnings for California Dashers and revenue for restaurants that rely upon sales from delivery to keep their businesses open,” DoorDash told FT in a statement.

The action against DoorDash comes days after a California judge granted a similar injunction against Uber and Lyft at the request of California Attorney General Xavier Becerra.

On Monday (Aug. 10), California Superior Court Judge Ethan Schulman said the ride-share companies have until August 20 to reclassify their drivers. The companies are expected to appeal. The injunction requires Uber and Lyft to stop classifying their drivers as independent contractors pending further action by the court.

In response, CEO Dara Khosrowshahi told MSNBC this week that it may have to close temporarily.

“If the court doesn’t reconsider, then in California, it’s hard to believe we’ll be able to switch our model to full-time employment quickly,” she told the network.

Like Uber and Lyft, DoorDash said most of its workers prefer to be contractors, arguing that flexibility over working hours and location is impossible under an employee model.

In November, voters will be asked to approve Proposition 22, a ballot question that would repeal the gig law.

FT reported DoorDash has contributed $30 million to a joint fund supporting the ballot initiative. Uber and Lyft have each put in the same amount, along with contributions from other gig economy groups. The total backing for the “Yes on 22” campaign now stands at more than $110 million, the newspaper reported.

The opposition has only raised $1.6 million, according to the filings with the state of California.

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New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.



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