Workers on strike, protesting against the unfair wages provided to drivers
Recently, the disputed California bill, AB 5, was passed. This bill would cause businesses, such as Uber and Lyft, to no longer be able to hire people as independent contractors (read more about this in the article). This would in turn, force these businesses and gig companies to hire people as employees. While this may seem like a small change, this is actually a big switch. With this reclassification of workers from independent contractors to employees, these companies will need to grant these people basic labor rights, including things like a guaranteed minimum hourly wage, workers’ compensation, the ability to unionize, and much more. Uber, Lyft, and DoorDash have opposed and will attempt to overturn AB 5, stating that they want to work towards a solution that better benefits “worker flexibility” and “economic security.”
Questions:
- Do you think that this is a good change or will it inhibit worker flexibility and economic security, as some gig companies have stated?
- What effect do you foresee that this change will have on companies such as Uber and DoorDash?
- Do you believe that this will set a precedent for other states to follow in suit?
Although worker flexibility may be limited to some degree because of the many Uber/Lyft drivers and such work for these apps in between other jobs, these reasons are clearly excuses from companies that do not want to pay their workers or more and decrease their own salaries. I believe that this change will increase the amount of employees for the apps because it would be essentially be a stable, minimum wage job with slightly less, but similar flexibility in hours. However, seeing as how liberal California leans, I do not think other states will readily adopt this bill because California tends to use these apps more in the first place and also places a greater emphasis on living wages and better working conditions. Other larger, liberal states that may come to mind, namely New York, still heavily rely on cabs and other forms of transportation. Therefore, this bill may begin to influence other states, but I do not think any will follow California’s lead anytime soon.
ReplyDeleteI think this issue is a little more complicated than a simple yes or no response to "is this good?" For starters, while I'm sure the knee jerk reaction is that AB 5 is good because it's about giving rights to this new occupation that's been created by unique apps like Uber and DoorDash, the entire concept is sort of contradictory to the original intent of these apps. For example, Uber advertises itself as a way for ordinary people with day jobs to earn some extra cash on their lunch break or free time. Now obviously not all Uber drivers treat Uber as an extra source of income; many people quit their jobs to become full-time Uber drivers, but perhaps most people still are. In that context, AB 5 becomes awkward and somewhat unreasonable, because things like hourly minimum wage and worker benefits are probably difficult to enforce and carry out for people who drive inconsistently and not at all full-time. Moreover, if the purpose of AB 5 is to help drivers with financial security, it might be meaningful to consider that the fact so many people chose to quit their secure jobs to drive Uber full-time kind of indicates that income from Uber is at least sort of satisfactory and stable.
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ReplyDeleteThis boils down to the question: For what jobs does minimum wage make sense? For fast food workers or flight attendants, totally! For Airbnb hosts or eBay sellers, not so much. Minimum wage typically applies when you're working for a company you could be fired from. This prevents companies from exploiting the labor of their employees while eliminating those who protest, driving market rates down to unsustainable levels. Does this apply to Uber? Not at all! Since Uber isn't paying you as a driver, it has no incentive to "fire" you (unless you severely lack integrity, but that's for another day). Now, I can potentially envision a system where Uber pays at least minimum wage for every hour of driving, regardless of location. Would this be ideal? Absolutely! Would it be logical to enforce this? Perhaps not so much.
ReplyDeleteThis is absolutely a good thing. The current "gig economy" in the United States where almost everyone is treated as an independent contractor, regardless of whether or not they should be treated as an employee, needs significant change to happen. By reclassifying the drivers as employees, they receive significantly more rights (https://www.worklawyers.com/independent-contractor-employee/). They can receive unemployment and worker's compensation along with unemployment benefits, and have workplace safety laws and minimum wage pay. The reason companies such as Uber and Doordash are protesting this is merely because it cuts into their own profits. They may claim this is for "worker flexibility", but they are looking out for only themselves. They can still allow employees flexibility over scheduling, though that is not a necessity after being reclassified. Why should hard workers not have protections and the ability to make a living wage?
ReplyDeleteThe AB 5 Bill has a lot of beneficial things: providing a safety net as well as health care and other services. By providing a minimum wage for these drivers, it will alleviate the stress that comes from having to make enough for rent in a city like Los Angeles.
ReplyDeleteAddressing Kai's point, Uber takes a 25% (or more, depending on the logistics of the drive; in a shorter ride they take a higher cut) of driver's cut (source: https://www.ridester.com/uber-fees/amp/). So the minimum wage requirement will force these ride-share companies to re-work their system to be more fair for drivers.
I agree that this bill may influence other state's policies, but I believe most will watch what happens in California before taking any action, much like how states can policy experiment with laws that disagree with federal laws—such as in the case of marijuana legalization.
The point that Audrey brings up here is very important. In order to give an appropriate reaction to AB 5, we first need to examine the current state of things. I recall a news story that aired several months ago analyzing the wage an uber driver makes when accounting for wear and tear on their car, insurance, general upkeep of a car, as well as gas mileage reality, and they discovered that uber drivers were really only making a few bucks an hour, if that. I assume the statistics apply similarly to lyft and other existing ride share apps. The profit margin for the driver is extremely low, while the companies themselves are thriving and exceeding their bottom line almost tenfold. As far as AB 5 goes, it may not be the perfect solution, as explained by Grace and Kai, but I believe it carries more importance than the laws it imposes in the first place. The bill opens the long avoided discussion of the fair treatment of drivers that are the forerunners of jobs brought on in the 21st century by the development of technology. California at least took the initiative to start attempting to solve the clear issues (especially one of exploitation) that Uber and Lyft drivers are experience in the hands of the company policies as they exist today. There was no precedent of this type of work to go off of, so trial and error is inevitable. However, when it comes to protecting workers and their livelihood, doing nothing is definitely worse than trying and failing to help them. Consumer cost will most certainly rise in the coming years if workers are to be treated fairly, either that or companies will have to take far less of their driver's earnings as profit (without increasing revenue, that is) and we all know how unlikely that is.
DeleteIn response to your first question, I believe that this change will be beneficial for individuals who work for gig companies like Uber and Lyft. By passing AB 5, workers will be able to receive employee benefits such as health care, minimum wage, etc. These benefits will help all individuals who work for gig companies in California whereas before, they would've had to work entirely out of their own pockets (gas, depreciation of the car, etc.) while corporations like Uber and Lyft make profit. Moreover, in response to your third question, Uber and Lyft are used internationally and I believe that it's likely that similar bills such as AB 5 will be passed in those countries as well.
ReplyDeleteThis bill closes a loophole that companies like Uber and Lyft have been exploiting for years now. As Sydney brought up earlier, the profit margins for these companies are extremely high, and for the drivers extremely low. I think more importantly than the fact that the drivers ARE being taken advantage of, some of them aren't even necessarily aware. On a trip to three east coast cities, Baltimore, Philadelphia, and Boston, conversations with my rideshare drivers illuminated the fact that the companies aren't always exactly transparent about the terms of their financial relationship with their drivers.
ReplyDeleteOne of my drivers from Baltimore told me that she ended up not being reimbursed for upkeep on her car caused by wear and tear, because the process for the reimbursement was too bureaucratically complicated, and Uber repeatedly claimed its policy would not cover that specific type of damage for one reason or another.
A driver from Philadelphia confessed he didn't know the details of how he was being paid- what percentage of his fare the company took, whether or not there was a minimum fare per rider or what types of damage his company would and would not cover.
A bill like AB5 may not be the perfect solution, but it is certainly a step in the right direction for ending the exploitation of millions of honest workers.
While I definitely agree that this bill is a step in the right direction away from worker exploitation, I feel like a result of the major changes in passing the AB5 bill will be that the targeted gig companies like Uber and Lyft will not be able to hire as many employees due to the benefits that they have to provide, or will have to increase the amount they charge in order to make up for the difference. If the former becomes the case, many people will not be able to make some extra money as a driver, even if it only comes out to a few dollars per hour. As for the last question, I think other states following suit will be a matter of watching how the situation unfolds, like how these gig companies will react, and how it impacts workers. Hopefully things go as planned, and the working force comes out on top.
ReplyDeleteAs much as my Red heart would love to celebrate this triumph of the proletariat over the despicable bourgeoisie, I must disagree with the bill. However, I do agree with my classmates’ comments that companies such as Uber and Lyft are exploiting their drivers.
ReplyDeleteFirst, the federal government offers three guidelines on what separates independent contractors from employees, though these may be modified at the state level. These three points are taken from the IRS’ website and LegalEagle’s video on businesses and LLCs
Behavioral control:
Points in favor of classifying drivers as independent contractors:
Drivers are free to start or stop work whenever they want
Drivers can perform the job however they want; Uber and Lyft do not train them
Financial control:
Independent contractor:
Drivers are not reimbursed for gas or vehicle maintenance. Compensation for collisions or injury is limited
Drivers use exclusively their own tools, which they have to pay for and maintain themselves
Drivers are able to work for other companies simultaneously while working for Uber or Lyft
Drivers can potentially lose money while working; there is no guaranteed salary or wage
Employee:
Drivers’ payment is managed by the company
Relationship between the parties:
Independent contractor:
Uber and Lyft both describe drivers as independent contractors
Drivers do not receive benefits
Employee:
Drivers can be “deactivated” at any time
Drivers offer a service that is a core part of the company
Overall, I think Uber and Lyft drivers are closer to independent contractors than employers. Many of these drivers depend on the flexibility offered by this status to fit in ride-sharing between other jobs, or increase efficiency by running both Uber and Lyft apps simultaneously, so reclassifying them as employees could actually hurt them. However, Uber and Lyft, through certain employee-like contract terms, do have expanded control over their drivers compared to regular independent contractors and are hence more easily able to exploit them. In the list above, most of the terms that point towards employee are ones that offer the company more control over drivers, while the ones that point towards independent contractor are ones that reduce the responsibilities of the company.
Rather than reclassifying these people as employees, I think a better option would be to have Uber and Lyft rebrand themselves as companies that connects passengers with drivers, rather than companies that provide rides, which they are not. They should lose the control over drivers that they have to better reflect their status as independent contractors.
I really see both sides of this argument. I'm not very familiar with the language of the bill but I do believe there is a way to make benefits fair to everyone. There could be a way to both have the option to work or continue being a contractor. Depending on the number of hours an individual is able to work. I'm not very familiar with how uber or lyft employees were paid in the past, but I feel that this bill was in the best interest for the majority of employees, and I hope that if it gets redone it continues to help the majority of people.
ReplyDeleteI understand reasons as to why Bill AB 5 was passed and how it protects against worker exploitation, but I believe that people who work for companies such as Uber and Lyft are more closely related to independent contractors than employees. I believe that it is a good change for people working for these companies because receiving employee benefits can always been seen as a positive; however, many of these workers rely on the flexibility that the job provides. When these workers are reclassified as employees, the company may be able to exert more control over them. Did the workers agree for the exchange in flexibility and freedom for employee rights and benefits? I am sure that there are different opinions within the community of these workers but the hard question to answer is which opinion is the right one. I believe that the companies that have been forced to change the status of their workers will end up losing money due to the hourly pay they must give to each worker. California is seen as a progressive state that lays foundations for other states on many issues, but I believe that it may take a while for a bill like this to be passed somewhere else. It has not yet proven to be beneficial, and until it has, states are not likely to follow in our footsteps.
ReplyDeleteI believe that this bill redundantly pushes Uber and Lyft in the direction of taxies. It crumples the ride-share business model, and as Uber’s chief legal officer states that, “It would not be ‘choose when you want to work,’ it would be shift work” (https://www.latimes.com/california/story/2019-09-06/definition-employees-assembly-bill-5-sacramento-showdown-california). Work hour flexibility is the point of these types of companies although proponents of the bill confusingly argue “nothing in the law would stop the companies from offering schedule flexibility to employees” (Campbell). Although health care, minimum wage, etc. are plausible reasons to pass AB5, flexibility is definitely not. To protect workers’ rights, I would instead lean to gig companies’ compromises, guaranteeing rights without naming drivers employees. Additionally, this is going to be detrimental for companies like Uber and Lyft, forcing them to cut off workers because of all the benefits they must provide for them. With less drivers circulating, there will be longer wait times and higher fees for riders, decreasing the accessibility and overall effectiveness of the service.
ReplyDeleteThe companies Uber and Lyft are part of the gig economy, meaning that the intention of those companies is not to hire employees in the normal sense of the word. Those that drive for either of those companies are more similar to independent contractors, or people that drive only as a side job to earn more money. Legislation like this would have a large effect on Uber and Lyft because it would force them to expand their budgets to pay all the drivers at least minimum wage. Though this would be bad for the companies, it would probably not be bad for the economy as those companies do not compose the majority of it. It could set a precedent for other states that have likeminded views to those of California.
ReplyDeleteI think the reclassification of Uber and Lyft drivers as employees is a good change that will finally give them financial stability. Before, drivers were not guaranteed a certain amount of earnings, which made it difficult to have Uber or Lyft as an actual job since they would never know how much they would earn. I'm not sure what effect this will have on companies that rely on drivers like Uber or Doordash. Ultimately, they will either have to accept a thinner profit margin or transfer the extra cost of their employees onto the consumer. Obviously there are benefits and drawbacks to each. I am hopeful that this will the an indicator for other states to follow suit since it would be invaluable legislation for drivers.
ReplyDeleteI believe that the bill will essentially benefit the workers that are already licensed under their respective ride service providers, but I can see that it may have unintended consequences in the job market as a whole. For one, these changes will strain the resources of the ride service companies even further, making it harder to sustain the company model under financial burdens. As such, there may be actions that might limit the amount of ride-share drivers that are employed, which will make the job market in that field even more difficult i.e. setting higher standards. If this bill becomes passed, other states will most certainly follow the suit of California (due to mass influence), but the future remains unclear.
ReplyDeleteThis change may lead to an increase of the amount of employees for the apps since it is essentially a stable, minimum wage job with somewhat flexible hours. The chances of other states adopting AB 5 are very unlikely because busy, populated states like California or Nevada, tend to use these apps more in the first place, thus placing a greater need on better working conditions and living wages. Some states, for example New York, still rely on cabs and also their underground tunnels to get around places, so there is not much of a demand for these types of apps. However, as time goes on, more and more states may eventually be influenced by AB 5 and will follow after California.
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