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Nithin Coca headshot

California’s AB5 Could Transform the Gig Economy in Favor of Workers

By Nithin Coca
Gig Economy

Something incredible is happening in California. Despite opposition, lobbying, and millions in spending by Uber, Lyft and Doordash, Assembly Bill 5 (AB5), which would force gig workers who met certain work standards to be classified as regular employees with benefits, is looking more and more likely to pass and be signed into law by Governor Gavin Newsom.

“Lyft and Uber are fighting this bill like crazy,” said Bob Reynolds, member of UberPeople, a ride-hailing driver community, in public post. “They have pulled out all the stops in an effort to not have to pay the drivers an honest day's pay for an honest day's work.”

AB5 is, in actuality, a modest bill that would give gig workers basic labor protections, such as a guaranteed minimum wage. It explicitly excludes several categories of workers, including medical professionals, architects, financial advisers, or hair stylists – genuinely independent workers. The target is clearly those who work for gig apps.

This bill, which is the first of its kind in the United States, would address a real and growing problem. The Uber gig model is built on top of worker exploitation. There is clear evidence that gig worker wages have fallen year after year, as platforms reduces their workers’ take. Some drivers barely make minimum wage and often find they have to work long shifts to make ends meet. There’s also no clear system for disputes, meaning that drivers, including those who have invested in vehicles to use with Uber or Lyft can be deactivated for any reason, anytime.

These companies regularly violate even the weak existing labor regulations for contract workers. Uber has amassed an astounding array of fines: $20 million for misleading “prospective drivers with exaggerated earnings claims and claims about financing through its Vehicle Solutions Program” to the Federal Trade Commission; $11.4 million in Pennsylvania for operating without approval; $7.3 million by California for failing to provide mandatory data to the state’s Public Utility Commission; and many, many more.

“We cannot sit by while companies pass off their own costs of doing business onto California’s taxpayers and responsible businesses, while depriving millions of workers of the labor law protections that they are rightfully entitled to,” said Assemblywoman Lorena Gonzalez (D-San Diego), who introduced the bill, in a press statement.

Lyft, despite getting less attention, is hardly better and often stands alongside its competitor when it comes to restricting workers voices. In fact, it’s hard to find a gig economy start-up that treats workers well – even Juno, which promised to give 50 percent of its equity to its drivers, ended up giving them nearly nothing when it was acquired by competitor Gett two years ago.

Gig economy platforms were able to continue exploiting workers and avoiding labor laws due to their lobbying efforts. Uber, in particular, has long resorted to shady tactics to push politicians. When New York City Mayor Bill de Blasio was considering restricting the number of app-based drivers in 2014, it created a fake “de Blasio’s Uber” feature so that every time New Yorkers logged on to order a car, they were reminded of the mayor’s threat with a message reading “NO CARS — SEE WHY” and were sent directly to a petition opposing the new rules. It worked.

So, what has changed? Workers are starting to organize, and cities are no longer allowing themselves to get bullied. Four years after initially failing, New York City did pass both a minimum wage and driver limits laws, with support from the Independent Drivers Guild. App-based drivers groups have sprung up across the country, including in California where the California App-based Drivers Association is affiliated with the Teamsters Union.

Unfortunately, Uber, Lyft, Doordash and other platforms, none of which are profitable, won’t sit back despite the demands of workers and politicians. They are already planning to challenge AB5 in court, and are gathering signatures to try to revoke the bill in a ballot referendum. This, more than anything, shows the true colors of the gig economy. Instead of working to address the real concerns and needs of workers, they are trying to rig the system to benefit their exploitative practices. Thankfully, the labor movement is ready to stand up and defend workers’ rights.

“This announcement lays bare the real motivation of multi-billion dollar gig companies,” said Art Pulaski of the California Labor Federation in a press statement. “They never cared about their drivers or workers. The only thing they care about is their bottom line and making their executives even richer than they already are. The California labor movement is unified in opposing this cynical measure.”

If California succeeds in passing, implementing, and maintaining AB5, it could herald a new chapter for the workers who make the gig economy possible – and the future of Uber, Lyft, and other gig platforms’ already struggling stock prices.

Image credit of protest at Uber offices in San Francisco: Phil Dokas/Flickr

Nithin Coca headshot

Nithin Coca is a freelance journalist who focuses on environmental, social, and economic issues around the world, with specific expertise in Southeast Asia.

Read more stories by Nithin Coca