Ride-hailing firms only have 10 days to turn things around.
Ethan Schulman, a San Francisco judge has on Monday issued a preliminary injunction to stop the drive-hailing companies from referring to their drivers as independent contractors and to comply with the wage floor and unemployment provisions for the workers.
The injunction came as response to the lawsuit filed against the Ride-hailing companies by the California Labour commissioner over skirting of California’s landmark Assembly Bill 5 (AB5). This bill was signed into law last year and has been effective since the 1st of January. This law makes it impossible for companies to misclassify their workers as independent contractors rather than employees entitled to a minimum wage and other statutory benefits. It is said that the AB5 is the strictest labor law in America.
As ridership stumbles and drivers struggle to protect themselves from contacting the deadly COVID-19 virus, there has been raging agitation for compensation and unemployment benefits for these drivers. In its original complaint, the state made reference to the companies combined efforts to undermine the AB5 by spending more than $100m on the 2020 ballot that was to be held in November. Furthermore the state berated them for launching aggressive public relation campaigns with the hope of enshrining their ability to mistreat their workers during the pandemic. The state argued that these companies should do away with their exorbitance to frustrate the AB5 enforcement and to reinvest their focus towards the betterment of their workers.
In their defense, the companies argued that they are not transportation companies but technology platforms and their drivers are not core to their platforms.
Schulman laid into that argument by issuing an injunction on the ground that none of their pleas were persuasive. The injunction was sought in the state of California’s lawsuit, to allow for enforcement of the Assembly Bill 5 against Uber and Lyft, which argued that the employment provision is not applicable to the companies.
The ruling did not automatically turn these drivers into full employees. But only strengthen what’s expected to be lengthy rounds of appeals between the drive-hailing firms and a unpaid wages lawyer. The Judge stayed the ruling for 10 days to appeal. Uber and Lyft will appeal in the court of law by next week Monday.
With the Uber and Lyft strategy to consider drivers as independent contractors, the companies have been able to offer instant and affordable rides by expanding the number of their drivers on their platforms, which is easily accessible only after a few clicks. And failing when it comes to providing their drivers some benefits such as health insurance and pension.
A Uber representative said that since the month the AB5 became effective, Uber has made some notable changes. Like allowing drivers to set their rates. And further stated that:
“When over 3 million Californians are without a job, our elected leaders’ focus should be on creating jobs and not trying to shut down an entire industry amidst an economic depression.”
On the other hand, Julie Wood, a Lyft spokeswoman, claimed that most drivers don’t want to be employees.
But in reality only 70 out of 734 drivers do not want to be identified as employees but as drivers. Lyft argued that many opt for gigs as a temporary outlet when they are without jobs or find themselves in an adverse economic atmosphere. According to these companies these drivers champion the flexibility of contract work.
And finally, It is worthy to note that these companies took some beating with the COVID-19 pandemic. As the virus nearly evaporated drive-hailing bookings. With Uber’s declining in 75% from April to June. Therefore if the companies should redefine their business model, reclassify these drivers as their full time employees, shodding salaries and other statutory benefits by embarking on this pricey endeavor. The state would be forcing them to disrupt the passenger’s experience. And turning a process that was once done with ease into something that is not. Not to talk of adding to the 3 millions people in California without any means of livelihood.