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Gig-Workers Across CA Protest in Advance of Judge’s Ruling

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Gig-Workers Across California Protest on Thursday 8/6 in Advance of Judge’s Ruling

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Gig-Workers Demand That Uber And Lyft Obey AB 5

This Thursday, August 6, gig-workers across the state of California will be participating in actions demanding that Uber and Lyft obey AB 5 and immediately reclassify their workers as employees. Workers will also be demanding that the companies drop their Prop 22 Ballot Initiative (which the company’s have committed to spend $110m on) which would roll back gig-workers’ rights. This statewide day of action comes in advance of a judge’s ruling on the preliminary injunction motion filed by the California Attorney General in the state’s lawsuit against Uber and Lyft, which will come down at 1:30 PM on Thursday.

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In Oakland, drivers from Gig Workers Rising, Rideshare Drivers United & We Drive Progress will be holding a rally titled “Workers Can’t Wait” to demand the employee status they are legally owed under AB 5. Workers will gather at the East Oakland Lyft Hub and, starting at 11:30 AM, various drivers will speak about the grave mistreatment by the companies and demanding that voters vote no on Prop 22.

In Los Angeles, Mobile Workers Alliance and Rideshare Drivers United will host a joint press conference at a Lyft hub. The action is scheduled to begin at 10:30 AM.

California Attorney General Xavier Becerra and a coalition of city attorneys filed an injunction in June to require Uber and Lyft to immediately begin obeying AB 5, which took effect in January. AB 5 requires the companies to reclassify their drivers as employees. Uber and Lyft argue that they shouldn’t be required to follow the law until after voters vote on Prop 22 in November. Becerra argues the harm currently facing drivers is so great that it would be neglectful to wait until the end of the current litigation. The law is clearly on the workers’ side.



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California’s fight over the gig economy underscores the need for labor law reform – Orange County Register

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Big tech and organized labor are battling it out—and Californians are getting caught in the crosshairs.

Proposition 22, a ballot measure that classified app-based drivers as independent contractors, passed with a majority vote of 58 percent during the November general election. Since the law was enacted in mid-December, Californians have encountered rising fees, app-based drivers are having difficulty receiving tips, and workers are being laid off. With new legal hurdles and souring public opinion, the ballot measure is off to an inauspicious start. Although many are blaming big tech, the real culprit is aging labor law.

United States labor law utilizes a binary classification scheme, where workers are either employees or independent contractors. The word “employee” is embedded in the regulatory structures governing employment, such that companies with employees must abide by a vast array of legal obligations. But this rigid classification methodology, and its derivative legal tests, inconsistently applies to gig workers.

In recent years, California judges have lamented that worker classification tests, specifically the Borello Test, are inaccurate. Since 1989, the Borello Test, established in S.G. Borello & Sons Inc. v. Department of Industrial Relations, was the predominant method to determine employee versus independent contractor status in California. In Douglas O’Connor, et al. v. Uber, Judge Edward Chen asserted that the “application of the traditional test of employment – a test which evolved under an economic model very different from the new ‘sharing economy’” created “significant challenges” when applied to Uber’s business model. Judge Vince Chhabria, who presided over similar cases, found that the “test the California courts have developed over the 20th Century for classifying workers isn’t very helpful” in addressing contemporary problems. This has since been referred to as the “square peg into a round hole dilemma” by legal experts.

Assembly Bill 5 codified the ABC Test, which was first introduced in Dynamex Operations West, Inc. v. Superior Court of Los Angeles. These metrics were designed to be more predictable, consistent, and simplistic than the Borello Test. Under the ABC Test, app-based companies would have been required to classify their workers as employees and ultimately forgo the defining features of gig employment. After losing in the courts, these companies turned to voters as a last-ditch effort.

The Yes on Prop 22 coalition, funded by companies such as Uber, Lyft, and DoorDash, poured over $200 million into its campaign to “save app-based jobs and services.” The coalition warned that if the ballot measure did not pass, gig apps would have higher prices and workers would be laid off. Despite passing Proposition 22, Californians are still experiencing these economic woes.

In order to garner more votes, app-based companies promised better compensation, health benefits, and civil rights protections for gig workers, even though such guarantees necessitated more fees and changes. By doing so, gig work began to resemble traditional employment, rather than an alternative work arrangement.

But saying “no” to Proposition 22 would not have yielded better outcomes. Classifying gig workers as employees would have resulted in a greater erosion of choice, flexibility, and autonomy, if not a complete discontinuation of services in the state.

The ballot measure was never intended to fix antiquated employment classifications. It was a direct response to the ABC Test which, rather than sort through the nuance of gig work, hastily classified these workers as employees.

Gig workers and consumers will continue to experience economic woes until there is significant clarification in state and federal employment classifications. Some legal experts have advocated for a third, hybrid status for gig workers, a category in between independent contractor and employee. Although Proposition 22 attempted to create this third category, it did so unilaterally and covered its blindspots with a multi-million dollar campaign. For this reason, critics have dismissed the proposal as an example of big tech writing their own exemption.

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Retirement Planning for the ‘Gig’ Economy

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Ride sharing app with driver

Changes have been coming fast and furiously for workers in the gig economy. Before the pandemic, the number of gig workers–a broad coalition that includes delivery and ride-share drivers as well as contract-based knowledge workers–was growing quickly.

Enter the pandemic. While the broader trend toward companies hiring fewer permanent employees still appears to be intact, the coronavirus crisis has changed the landscape. Ride-share driving jobs through once-booming services like Uber and Lyft disappeared almost overnight, while the number of gig jobs in the food-, grocery-, and package-delivery areas increased. The types of workers seeking these jobs have changed, too, as those who were laid-off and furloughed sought to replace their incomes, while some older workers or those with pre-existing health conditions that make them vulnerable to COVID-19 complications have stepped away.

Self-employed individuals have a completely different set of opportunities and challenges, from both a lifestyle and financial perspective, than those who work full-time for a single employer.

One of the traditional selling points for contractors is the ability to better balance work and family obligations. For some parents during the pandemic, for example, their daytime roles as at-home learning instructors have all but necessitated gig work during non-school hours. Contract work, especially in certain specialized fields such as technology, can also be lucrative financially.

At the same time, not having a steady paycheck–not to mention missing out on crucial employee benefits –can be a source of financial stress. The threat of periodic income disruptions may also make workers with non-traditional employment arrangements less likely or less able to save for long-term goals. If they know they could have a months-long disruption in their paychecks, they might be reticent to park extra funds in a retirement account that carries strictures on premature withdrawals.

But self-employed individuals can and should take steps to ensure their retirement security, just as people in conventional work arrangements should. Here are some tips to help them do so.

First Stop: Assess Insurance Coverage
Building retirement savings is important for contractors and other people in non-traditional work arrangements. But before they focus on retirement savings, such workers should first ensure that they’ve adequately protected themselves against shorter-term financial hardships, which can derail their plans to achieve long-term financial goals. If a self-employed person is forced to turn to unattractive forms of financing such as credit cards to defray near-term income needs, the cost of that financing is likely to swamp the long-term returns on any money earmarked for retirement. Here, lining up adequate insurance coverage is an essential first stop, especially extended healthcare and disability coverage.
 

Next Stop: Bulk Up Emergency/Short-Term Reserves
In addition to conducting an insurance fire drill, contract workers should also assess the adequacy of their liquid reserves before earmarking assets for retirement. The main reason to amass a so-called emergency fund is to provide cash flow in case of job loss. And lumpy income streams, as well as periodic income disruptions, are all but facts of life for contractors and other self-employed individuals. Moreover, disability coverage may be cost-prohibitive for self-employed people. All of these factors argue for self-employed workers maintaining emergency funds that are larger than the standard three to six months’ worth of living expenses often prescribed by financial planners; I think closer to a year’s worth of living expenses makes sense for self-employed individuals. And if taxes are not being withheld from a contractor’s paycheck, that cash fund can also serve as a receptacle for monies earmarked for taxes.

Next Stop: Find a Way to Save More for Retirement
A person assiduously investing $6,000 a year in a retirement account for 40 years who enjoyed 6% growth on her money would have a little over $920,000 at the end of the period. That’s nothing to sneeze at, but nor is it enough to fund retirement for many households, especially considering the effects inflation will have on purchasing power over that 40-year period.

For that reason, individual self-employed workers looking to amass significant sums for retirement need to take a look at additional receptacles for retirement savings. Rather than dumping the money into one of these accounts before the deadline each year, they should take advantage of the automatic investment features that can accompany many of these accounts, contributing fixed sums at regular intervals.

Next Stop: Invest With an Eye Toward Your Human Capital
At first blush, retirement savings for self-employed workers should be invested just like the savings for any other worker. Investors with longer time horizons to retirement can take more risks in search of higher growth, whereas those with shorter time horizons should balance risky, faster-growing investments with more-stable, slow-growth investments.

That’s generally true. Yet as noted above, self-employed workers often have more volatile income streams than their counterparts who receive fixed, regular paychecks. While it’s never ideal to withdraw retirement funds early, the odds are higher that self-employed workers will need to tap their accounts unexpectedly or prematurely. Thus, self-employed workers’ investment portfolios should arguably be managed a bit more conservatively to reflect that possibility. That prospect also argues for self-employed individuals holding some of their retirement assets in discrete conservative holdings rather than obtaining that same conservative exposure via an all-in-one product like a target-date fund.

This article was originally written for a U.S. Audience

 

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Gig-worker test retroactive, California Supreme Court says in ‘important’ ruling

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California’s Supreme Court ruled Thursday that the test the state adopted for determining worker classification is retroactive, which could have big implications for gig companies like Uber Technologies Inc. and Lyft Inc.

The “ABC test” was determined in a state Supreme Court decision in 2018, called Dynamex, and was later codified in Assembly Bill 5, which became law in 2020. Under the test, workers can be considered independent contractors only if they control their work; if their duties fall outside the scope of a company’s normal business; and if they have an independent business doing that work.

AB 5 led to Proposition 22 as Uber
UBER,
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,
Lyft
LYFT,
-2.08%

and others sought to exempt themselves from having to treat their drivers and delivery workers as employees. Prop. 22 was passed by 58% of California voters in November, but not before a state appeals court had upheld a decision ordering Uber and Lyft to comply with AB 5.

See: Uber and Lyft told to classify drivers as employees

Gig companies are also facing other lawsuits over worker classification in the state and elsewhere, and under Thursday’s ruling — which applies to cases that had not been settled before the Dynamex ruling in April 2018 — they could face liability if they lose those cases.

Thursday’s ruling was in response to a case brought by workers against Jan-Pro Franchising International, Inc. Chief Justice Tani Cantil-Sakauye wrote that “in light of the general rule of retroactivity of judicial decisions and the fundamental importance of the protections afforded by the [state’s] wage orders, we find no compelling justification for denying workers included in such lawsuits the benefit of the standard set forth in
Dynamex.”

William Gould, professor emeritus at Stanford Law School and a former chairman of the National Labor Relations Board, called the ruling “sound and important.” He also said it was hardly surprising, “given the likelihood that major gig companies like Uber and Lyft were liable under either standard [of worker classification]” and that Proposition 22 does not protect the companies retroactively.

Uber, DoorDash Inc. DASH and Instacart said they had no comment Thursday, while Lyft has not returned a request for comment.

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