California’s passage of a bill to force “gig economy” companies such as Uber and Lyft to classify all workers as employees rather than contractors is drawing a wary and divided reaction from the drivers for those companies. Even those generally supportive of the legislation don’t necessarily see it as a simple fix.
People who drive full time for the companies appear more likely to see it as a necessary correction, arguing the companies have squeezed drivers by pushing down fare rates.
Part-time drivers, though, who make up the majority of drivers, see less benefit in it because they don’t want full-time employment.
The dividing line is gray, however, and there’s a widespread belief that the companies will find ways around the legislation.
“No one really knows how this is going to play out in the end as the companies adjust their business,” said Ben Mandell, author of Everybody Loves Uber: The Untold Story Of How Uber Operates, an analysis of the companies’ business practices, and himself a driver. “However it seems to make more sense that Uber and Lyft would prefer part-time drivers — under 30 hours per week — in order to avoid the health care costs and the potential overtime costs when a driver goes over 40 hours a week.”
The California legislature passed the legislation Wednesday, and Democratic Gov. Gavin Newsom has vowed to sign it. The bill would force the companies to stop classifying workers as contractors and instead reclassify them as regular employees. New York passed related legislation last year, and the approach has been championed by liberal Democratic presidential candidates, such as Sens. Elizabeth Warren of Massachusetts, Bernie Sanders of Vermont, and Kamala Harris of California.
Tony West, Uber’s chief legal officer, said in a news conference Wednesday that the company would continue to classify its drivers as contractors when the law goes into effect, set for Jan. 1, and is “no stranger to legal battles.”
A contractor is treated as an independent business and is typically not covered by federal laws and regulations covering private sector employees. Reclassifying drivers for Uber and Lyft as employees means that they would receive various federally mandated benefits and protections, such as a minimum wage and overtime after 40 hours a week. It would also make collective bargaining easier for the workers.
It would be a major change to the businesses since their entire system is built around hiring only contractors. The companies argue that the arrangement is good for the drivers because it gives them flexibility and allows them to work as much or as little as they want.
Troy, a full-time Washington, D.C.-based driver, said that ridesharing used to be a good deal, but Uber and Lyft “got greedy” and squeezed the rates they pay to drivers so much that it’s no longer the case.
“They kept looking for ways to chisel money out of drivers’ pockets,” Troy said via email. “Upfront Pricing, Flat-rate Surge, ‘rebalanced rates’ and similar changes always meant less money to drivers.”
He’s not sure that the companies’ business model can work in the Golden State under the changes that the legislature has imposed. He argued that it might be a good thing if the legislation drives Uber and Lyft out of business, on the logic that ridesharing is so popular with drivers and passengers, called “pax” by most drivers, that other companies would quickly step in to fill the void. In his thinking, passengers have demonstrated they’ll pay a premium for the convenience of pressing a button and summoning a car versus the uncertainty of public transportation or traditional taxis.
Troy, like others quoted in this story, was contacted through the social media site Uberpeople.net. Most drivers requested anonymity in order to speak freely about their experiences with the companies and their thoughts on how California’s approach would impact the industry.
Several drivers noted that making drivers full-time employees raises a lot of practical issues, and it is unclear how they will be addressed. A minimum wage requirement, for example, will likely require that companies pay drivers for time spent waiting for fares and the time spent driving to get passengers. That will give the companies a strong incentive to cut down on the number of drivers and reduce their wait times. That will likely mean fewer drivers overall, with driving no longer an option for some.
“If Uber/Lyft start scheduling work hours, that will be a huge problem for many drivers,” said Kathy, an L.A.-based driver. “[W]hat is a full time employee with Ride Share? Is that 40 hours with pax in the car OR 40 hours of logged on time or a set 8 hour day? Big, no, huge difference.”
That independence is a big draw for many drivers, said David Hogberg, a full-time Maryland-based Uber driver and conservative author. “The great thing about ridesharing jobs was that you could work as part-time, as full-time, or as overtime. People need the flexibility,” he said.
