News and Commentary

California Passes ‘Bold’ New Ride-Sharing Law That Could End Up Hurting Drivers
A For-Contract Uber Driver in New York
Drew Angerer/Staff via Getty Images

California Gov. Gavin Newsom signed legislation on Wednesday that would require ride-sharing companies like Uber and Lyft to reclassify drivers from independent contractors to employees, according to the Associated Press.

Proponents of the law, which resembles a state supreme court decision made last year, argue that reclassifying workers as employees will confer workplace benefits to drivers who otherwise would not have them.

“Today, we are disrupting the status quo and taking a bold step forward to rebuild our middle class and reshape the future of workers as we know it,” the legislation’s author, Democratic state representative Lorena Gonzales, said in a statement released Wednesday.

Ride-sharing companies have been pushing back against the proposed changes, maintaining that reclassifying workers as employees threatens the ride-sharing business model, which is built around offering drivers flexible hours.

“Speak with drivers, and they will tell you they are attracted to the work because of the flexibility it affords,” Lyft and Uber executives said in a joint op-ed published in the San Francisco Chronicle last June. “Very few jobs allow you to start or stop working whenever, wherever, as often as you want.”

As the National Review noted in May:

Proponents of reclassification are quick to invoke the image of a recent rise in the number of downtrodden workers trying to juggle three or four gig-economy or contracting jobs at one time just to make ends meet. These workers need protection, the argument goes, and if they were reclassified, they would suddenly become eligible for overtime pay and a host of other benefits that normally attach to full-scale employees.

The problem is that this theory is not borne out by the facts; instead, it fundamentally misreads the shape of the modern American work force. In fact, contract work is not on the rise, and many contractors prefer their current worker status.

Data from the Bureau of Labor Statistics have consistently shown that part-time and contingent work arrangements are in line with historical averages. Contracting roles have actually decreased since 2005. Furthermore, surveys have reported that 79 percent of contract workers prefer their present work arrangement to more restrictive setups.

Former U.S. Sen. Barbara Boxer (D-CA), who is an advisor for Lyft, has also voiced concerns about the law, writing last August in the Chronicle that many drivers fear that they will lose “critical income” if they are reclassified as employees.

“Some of yesterday’s solutions work for today. Some don’t,” writes Boxer. “In an economy of great change we need to understand the new needs of both workers and businesses. We need to make sure they can all thrive, not just survive.”

Rep. Alexandria Ocasio-Cortez (D-NY), however, dismissed Boxer’s concerns outright and instead took the opportunity to slam her for taking a job as a “corporate lobbyist” and “fighting against” the interests of “working people.”

According to The Hill, last month, Lyft spokesman Adrian Durbin promised that the company would bring the issue to voters via ballot should they not reach a compromise with legislators. Lyft also said they would team up with Uber and Doordash to provide $90 million to support the ballot measure, reports the news agency.