They dressed like employees of Dynamex Operations West. The drivers in delivery trucks were required to wear the company’s uniform and display its logo on their vehicles. But, the vehicles were owned and maintained by the drivers and all the costs, from gas to insurance were paid for by the drivers, which the company argued, showed they were not employees at all, but independent contractors.
Therefore, Dynamex argued, it was perfectly legal for the company to skip out on paying the state of California taxes, and paying those drivers benefits, overtime, or even the state minimum wage.
A state court in California ruled this wasn’t fair or legal and set what’s called an ABC standard to settle that employee vs contractor question. If a worker a) is free from the company’s control, b) is doing work that isn’t central to the company’s business, and c) has an independent business, then that worker is a contractor. Otherwise, workers are employees and are entitled to minimum wage, health and safety protections and the right to unionize.
Over this summer, the California legislature put together AB-5, a law built on the Dyanamex decision; a law that takes aim at the economic inequities baked into the gig economy; a law that may substantially improve the lot of drivers for rideshare services like Uber, Lyft and DoorDash, and eventually, workers in the gig economy across the country.
After all, with the rideshare companies setting the terms of who can drive where and when, not to mention setting basic and surge prices, they can hardly say their workers are free from company control. So, ipso facto, under section A of AB-5 the argument in California seems to be over. Uber drivers are employees.
Which is why the three rideshare companies have pledged $30 million each to finance a campaign to overturn the law AB-5. That $90 million is a small fraction of the additional costs the services will face if they have to treat their workers as employees.
Uber and Lyft tried this in 2016 in Austin, Texas, spending $9 million trying to overturn local regulations including a fingerprint background check for drivers. Three days after the voters rejected the rideshare companies’ campaign, Uber and Lyft left town, walking away from a market of just under a million people and leaving dozens of suddenly unemployed drivers in the lurch.
California represents a market of 40 million people. Quitting it might kill off investment in the whole rideshare concept.
But some analysts say, if Uber wins on the contractor question it may lose on antitrust grounds. The deals they dictate to drivers and riders on service and price might be considered price fixing. Which is also illegal.
Edward Ongweso, Jr is a staff writer for Vice Media/Motherboard. He says of himself, “I’m interested in the political economy of Big Tech—specifically tracing how venture capital from Silicon Valley has created monopolies that negatively impact consumer welfare, democratic governance, and the quality of public goods and services. I’ve worked as an organizer and researcher concerned with how Silicon Valley’s model was restructuring labor and social relations.
My goal is to understand Silicon Valley less as a cultural phenomenon than as a consequence of specific political, social, and economic orders. “