AB5 will become law in California beginning January 1, 2020. It could completely change the rideshare landscape, so drivers in all states should pay attention to how this law plays out because other states may adopt similar regulations for rideshare.
Ezra Dubroff from The Rideshare Guy interviewed the creator of AB5, California State Assemblywoman Lorena Gonzalez. Check out the interiew and scroll to the interview transcript if you prefer to read.
Lorena Gonzalez: Story after story of Uber and Lyft drivers living out of their car, homeless, are barely hanging on. And meanwhile these companies just went public, and their CEOs are literally billionaires. They’re making you know, $45 million a year. The companies themselves are billion dollar companies, and they’re refusing to share that with their workers, and that’s just wrong.
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Ezra Dubroff: Hey everyone, Ezra here, for The Rideshare Guy. Now recently I was up in Sacramento, California, covering one of the rallies related to California AB five, which is a bill that could affect how drivers are classified as workers going forward. Now one thing I realized from talking to so many drivers is that there’s quite a bit of confusion regarding AB 5, what exactly it is, and what its implications would be. Now we had the opportunity to actually speak with the author of the bill, State Assemblywoman Lorena Gonzalez. So you can hear directly from her what AB 5 is, and why it’s so important for drivers. We are here with California State Assemblywoman, Lorena Gonzalez, and she’s going to tell us about AB 5. So what is AB five?
Lorena Gonzalez: Well AB 5, it’s pretty simple. Last year the Supreme Court ruled on a decade long case about what constitutes an employee. It was a decision called the Dynamex decision. And in that, the Supreme Court said, enough with this old test, it’s very simple. If you do the primary work of the employer, you’re an employee. You know that pretty simple standard. That affected that one company, but clearly it was a test, and they call it the ABC test, it’s very clear, would affect everybody in California. And so rather than allow people, or force people to go sue every single time, we took that ruling and said it’s time to just apply it to all the laws in California, to all the employee classification laws, and set up a standard that everybody understands, both employees and employers, and as well as general taxpayers. So that’s what AB 5 does. It says, hey, basically, if you do the primary work of the employer, you’re an employee. You have the right to minimum wage, you have the right to overtime, you have the right to workers’ compensation, unemployment insurance, paid family leave, sick days, you have the ability if you want to join a union, and collectively bargain. The employer has to contribute 7.5% into Social Security and Medicare on your behalf, so all these things that are missing right now, when employees are treated as independent contractors, would be solidified in law.
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Lorena Gonzalez: Every time I’ve ever taken a ride share car, you talk to the drivers, and you get vastly different responses. But there are some things you hear time and time again, there’s not certainty of wages. They’re very afraid of being shut out of the app with no explanation. There’s no right to redress basically. I’ve heard stories right and left of, for example, a driver who was involved in an accident, not as actually engaging the accident, they got hit by another driver, another rideshare driver, and they lost their right to the app. So their car was ruined, they’re out of work, they went to the hospital, they have hospital bills, and now they lost their ability to earn a living, at no fault of their own. Okay, well there are a lot of things in that scenario that if you were an employee are solved. You have workers’ compensation, if you get hurt on the job, it means they take care of your medical bills. You have unemployment insurance if you lose your job, so that you have a little bit of a safety net. And you have the right to not be fired or discriminatory reasons.
Lorena Gonzalez: So these are issues that I think, when you talk to drivers, they realize there’s something missing. In California, we have rules, and we have a social compact of what we expect employers to do. And the reason we have that is because we have a social safety net that we, taxpayers, pay for. Right?
Ezra Dubroff: What you explained is the situation where the public is actually subsidizing these incredibly rich corporations?
Lorena Gonzalez: Yes. Absolutely. I mean, we’re subsidizing the workers. And I am a progressive Democrat, right? I probably vote for every bill that would help people not be in poverty. I believe that we can’t let people be homeless and poor. Last year, we passed a bill, it’s the Earned Income Tax Credit that now applies to independent contractors. That is a great bill, in that like its money in the pocket of independent contractors who haven’t made enough money. That’s taxpayer dollars though. We’re literally giving this to Uber and Lyft drivers, when they should just be making more money. And so we’re subsidizing these companies, as they get wealthier and wealthier, in the name of innovation, when there’s nothing innovative about piece-rate work, it’s been around forever. There’s nothing innovative about gig work, the original gig workers are performers, we figured that piece out.
Lorena Gonzalez: So they are companies that basically took Google Maps, and lined up two people together. They didn’t create some special unicorn potion that we’re suddenly going to excuse all the incoming quality they’re creating. Without question, I have never gotten into an Uber or Lyft with somebody who really relied on that as a living, as a job, where the driver felt like they were being treated fairly, and that’s pretty bad.
Ezra Dubroff: One of the talking points we hear a lot in the back and forth over AB 5 is that drivers will lose their flexibility. So is there a truth to the idea that employees can’t have flexibility in their work?
Lorena Gonzalez: Absolutely not. That’s one of, I think, the biggest lies being put out there by Uber and Lyft. Now, if Uber and Lyft decide that they don’t want to be flexible, and by the way they could decide that now, under this construct that people are under, then they wouldn’t be flexible. But that could happen as independent contractors, and that could happen as employees. If they decide, you know what? We’re going to have the exact same way of doing things. You get paid when you log in, you get paid at least a minimum wage when you’re on the app, there’s nothing in labor law that says you have to have a set schedule, that you have to work a certain amount of number of hours, or not work a certain number of hours besides overtime.
Lorena Gonzalez: We hope it passes and gets signed, and if it does, that means a driver would have the right to minimum wage, overtime protections, that’s time and a half if you work over eight hours a day, or 40 hours in a week. They’d be covered by workers’ compensation. They get unemployment insurance in case their app was shut down on them. They’d be paid for mileage, under current law, they’d actually be able to submit that to their employer. They’d have the right to take off three paid sick days, cause that’s the law in California. Paid time off, if you’re sick. They’d have the right, or the employer would work with them, so that they could have paid family leave. That’s something an employee pays payroll tax on, but it’s something that would be assessable then to them. They’d have the right to organize, if they wanted, they’d have seven and a half percent more going into their social security on behalf of, for their future obviously, for some sort of future when they’re done.
Lorena Gonzalez: So they would have those provisions, and Uber and Lyft would have to live by those. And there are a lot of people, of course, who say, “Well, they’ll just get up and leave.” Well, California is their largest market, it’s going to be kind of hard to leave. And if they do, there are hundreds of other companies out there that would start. We know this. There is a market for this product, and that market will still exist, and Uber and Lyft haven’t said they’ll leave. They just said they can’t sustain it. Well, I question that, their shareholders might make less money, their CEO, and COO, and founders may make less money, but they can share some of that profit with the drivers, and that’s what we’re hoping for.
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