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<\/figure><\/div>\n\n\n\n However, this tension<\/a> between companies and their drivers\u2019 employment classifications did not begin a few months ago. In fact, A.B. 5 codified<\/a> the \u201cABC test\u201d which was used two years ago in determining whether delivery drivers were employees or independent contractors in the landmark case, Dynamex Operations West, Inc. v. Superior Court<\/em><\/a>. The \u201cABC test,\u201d is now incorporated into California Labor Code \u00a7 2750.3. Under \u00a7 2750.3(a)(1)<\/a>, \u201c[A] person providing labor or services for remuneration shall be considered an employee rather than an independent contractor, unless the hiring entity demonstrates that all of the following conditions are satisfied:<\/p>\n\n\n\n In other words, unless a hiring entity can demonstrate that all three of the conditions or \u201cprongs\u201d are satisfied, their \u201cworker\u201d in question is to be considered an employee. In Judge Schulman\u2019s order<\/a>, he stressed that part (B) of the \u201cABC test\u201d was the main point of issue and that Uber and Lyft could not \u201cpossibly satisfy\u201d this prong.<\/p>\n\n\n\n Not surprisingly, Uber and Lyft appealed this injunction arguing<\/a> that A.B. 5 does not apply to them either because they are not \u201chiring entities\u201d within the meaning of the legislation or because their businesses fall within one or more of the statutory exceptions. Gig companies like Uber and Lyft have long dodged state and local laws by maintaining<\/a> that its main business isn\u2019t driving people around \u2013 instead, these companies argue they are a \u201ctechnology platform\u201d merely bringing<\/a> drivers and riders together. Yet, critics are skeptical of this argument focusing on how much control<\/a> and direction Uber and Lyft assert over the performance of their drivers, which illustrates more of an employee status rather than an independent contractor. For example<\/a>, Uber sets drivers\u2019 payment rates and the portion of commission they take out. Uber also sets drivers\u2019 performance targets (driver\u2019s rating, how many rides the drivers accept, and how many times they can cancel a ride), suggests a schedule (i.e. you can earn more money driving during \u201csurge\u201d hours), and ultimately controls the routes drivers take to get from A to B. <\/p>\n\n\n\n After Uber and Lyft both threatened to shut down their services in California to comply with Judge Schulman\u2019s injunction, an appeals court judge granted Uber and Lyft\u2019s emergency<\/a> stay \u2013 but, this won\u2019t last for long.<\/span><\/p><\/blockquote>\n\n\n\n After Uber and Lyft both threatened to shut down their services in California to comply with Judge Schulman\u2019s injunction, an appeals court judge granted Uber and Lyft\u2019s emergency<\/a> stay \u2013 but, this won\u2019t last for long. Companies have until early September to outline their plans about how they will make drivers employees if they lose the appeal. Uber’s CEO has spoken out<\/a> concerning how this might look: \u201cIf we do have to go to employment model, what\u2019s going to happen is that we will then have to underwrite driver productivity. There will be far fewer drivers employed, so my guess is 70-80% of users who use Uber for flexibility . . . will not be able to earn. The prices are going to go up [especially in smaller cities].\u201d However, Uber and Lyft also have a \u201cplan B\u201d<\/a> in case they lose the appeal. \u201cPlan B\u201d consists of doing everything in their power to get \u201cProposition 22\u201d to pass in California. <\/p>\n\n\n\n Uber and Lyft have put millions of dollars behind Proposition 22<\/a> which will be on the November ballot. Essentially, it is a measure that would exempt ride-sharing apps from A.B. 5 and, instead, adopt novel labor and wage requirements specific to the gig economy and app-based drivers. Judge Schulman<\/a> disparaged their initiatives stating: \u201cIf, as the People contend, Defendants are currently violating state law, it is no answer to say that they should be given a pass to continue doing so to see if they can muster their considerable financial resources to persuade the voters to change the law in their favor.\u201d Less colorfully, Judge Schulman asserts the passage of the proposition would still leave the companies liable for their past violations.<\/p>\n\n\n\n To ride-sharing apps like Uber and Lyft, however, it is a middle-ground solution that will provide their drivers with alternative protective rights while keeping the flexibility and integrity of their platform. Since they believe the flexibility piece of their operations is what\u2019s most at stake, Uber and Lyft have argued<\/a> that it is in the benefit of their drivers to either keep their current business model or adopt Proposition 22. A recent survey<\/a> was used to determine how Uber and Lyft drivers felt about employee versus independent contractor status in the wake of COVID-19. It turned out that prior to COVID-19, 81% of drivers expressed that they wanted to remain independent contractors as opposed to 71% after COVID-19. Many drivers have expressed fear that they will lose flexibility and receive lower pay if they are deemed employees, however, this is uncertain. <\/p>\n\n\n\n Many are now wondering what exactly Uber and Lyft would look like if they had to follow suit and classify their drivers as employees. Other states, like New York<\/a>, have considered ride-hail drivers as employees since 2016, and have recently demanded Uber and Lyft to pay unemployment compensation in the wake of COVID-19. One suspects that while there are many pros to employee status for ride-hail drivers, there are also many cons. While pros<\/a> consist of a set minimum wage, unemployment insurance, and social security benefits, cons seem to show that there will be fewer drivers allowed on the streets, and there will be highly-controlled windows for them to drive.<\/p>\n\n\n\n While Uber and Lyft are avidly fighting to avoid finally following A.B. 5, it doesn\u2019t seem favorable that they will succeed. Depending on the election and how Proposition 22 plays out, it very well could be the end of Uber and Lyft as we know it. However, it is not to say that Uber and Lyft will not try to reform their platform, or figure out a loophole to, yet again, evade paying what one estimates a cumulative $800 million dollar<\/a> increase between the two companies in reclassification costs.<\/p>\n\n\n\n September 17, 2020 | Anna C. Comer<\/p>\n","protected":false},"excerpt":{"rendered":" Picture this potentially familiar scenario: you\u2019re at your neighborhood bar in California and you realize that you\u2019ve probably had one too many drinks to drive home. You\u2019re looking down at your phone thinking, \u201cWho should I call to come pick me up?\u201d Well, depending on upcoming oral arguments in the California Court of Appeals, the …<\/a><\/p>\n","protected":false},"author":4,"featured_media":8008,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[51],"tags":[101,99,100,102,98],"_links":{"self":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/8007"}],"collection":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/comments?post=8007"}],"version-history":[{"count":5,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/8007\/revisions"}],"predecessor-version":[{"id":8018,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/posts\/8007\/revisions\/8018"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/media\/8008"}],"wp:attachment":[{"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/media?parent=8007"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/categories?post=8007"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.law.unc.edu\/ncjolt\/wp-json\/wp\/v2\/tags?post=8007"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}