Uber, Lyft have a California playbook to tackle proposed U.S. rules for workers


© Reuters. FILE PHOTO: A sign marks a meeting point for Lyft and Uber users at San Diego State University in San Diego


(Corrected to reflect that California AB5 is no longer law for hail and groceries instead of California AB5 is no longer law for anyone, paragraph 5; also corrects paragraph 20 to reflect that AB5 has been defeated “for app-based gig workers.”)

By Tina Bellon

(Reuters) -Uber, Elevator and other gig economy companies face a new challenge from the Biden administration of deploying contract workers, but as they prepare for a fight in Washington they could turn to a lobbying game book that led them to a pivotal win against last year helped the California regulators.

US President Joe Biden campaigned for a promise to provide legal protection and benefits to gig workers who, as independent contractors, generally do not have access to unemployment insurance, sick pay and health insurance. US Secretary of Labor Marty Walsh said last week, “A lot of gig workers should be classified as salaried employees.”

In Congress, Democratic lawmakers are pushing for a union-backed labor law, the PRO Act, which is modeled in part on a California law called AB5 that reclassifies most gig workers as white-collar workers.

However, AB5 is no longer the law for hail and grocery suppliers in California, while it continues to apply to other freelancers. Uber Technologies (NYSE 🙂 Inc., Lyft Inc. (NASDAQ :), DoorDash Inc., and Instacart, whose business model is based on low-cost, flexible labor, launched a $ 205 million campaign last November to see the Act was repealed for the industry.

Among the tactics developed in the California battle, the gig work companies used their apps to reach voters and drivers through news, email, leaflets, billboards, radio and online ads. They also urged workers on their platforms to speak out against AB5.

Companies threatened to put an end to the ubiquitous food delivery and hail services that many consumers got used to during the pandemic if drivers were classified as employees.

The looming battle for the status of gig economy workers takes place amid a broader debate about corporate regulation. The federal government exercised a light hand in regulating Uber, DoorDash, and other digital economy companies as it redefined traditional definitions of work, communications, or retail. Now, for a variety of reasons, Washington Democrats and Republicans are calling on the government to exercise more control over one-off startups that dominate major sectors of the economy.

Uber, Lyft, DoorDash and Instacart spent a total of $ 1.3 million lobbying the Biden administration and members of the US House of Representatives and Senate this year, according to the Center for Responsive Politics. In 2020, they spent around $ 5.7 million, more than half of which was from Uber.


Less than two weeks after Biden won the White House in November, companies formed the App-Based Work Alliance, a Washington-based advocacy group. The group is now campaigning for testimony from drivers and employees who deliver groceries stating that they want to remain independent contractors and don’t want the PRO Act because they fear it would take away their ability to post for a few hours a week Make money on your own schedule.

The companies cite surveys to argue that the majority of their mostly part-time workers do not want to be classified as employees.

While the polls show massive support for remaining independent contractors, they also follow years of threats from companies to eliminate job opportunities when workers become workers. Some of the surveys are co-written by corporate-relationship researchers, sponsored by the company, or filled in using unscientific methods by a blogger who posted emails and social media posts.

For example, a study by the National Bureau of Economic Research listed Uber’s chief economist Jonathan Hall as a co-author, and a 2020 survey of 1,000 Benenson Strategy Group and GS Strategy Group drivers was paid for by Uber. Uber said that while the survey was paid for to take the survey, it was conducted by reputable research groups.

In California, gig companies have not simply spoken out against changes to their employment practices. Instead, they advocated compromise and advocated changes to labor laws so that workers can remain contractors while receiving more modest benefits than the workers need.

According to DoorDash, employees only work an average of four hours a week, while according to Uber, 37% of US drivers and 58% of delivery drivers worked an average of less than 10 hours a week in the last quarter of 2020. The companies state that these part-time workers would work appearances would be impossible under an employment model.

However, Uber data from the pre-pandemic fourth quarter of 2019 also showed that California drivers working 25 hours or more per week completed more than 60% of all trips in the state, suggesting that full-time drivers do most of the work.


Gig Workers Rising, a group of workers who advocate greater utility and claim not to receive funding from workgroups, issued a statement rejecting the companies’ compromise proposal.

“(The proposal) is not a blueprint for workers’ rights, but a game plan for gig companies and investors looking to maximize their profits,” the group said in a statement.

AB5’s defeat for app-based gig workers in California was a blow to organized workgroups, the California Democrats, and even Biden and Vice President Kamala Harris, who urged state voters to reject the gig industry’s proposal.

Though AB5 is gone, California gig workers now have access to a number of benefits, including health care subsidies, accident insurance, and minimum wage, while passengers are in their cars. These benefits are significantly cheaper for businesses than employee benefits, and workgroups say drivers don’t know how to access them.

As the battle for gig workers’ rights intensifies nationally, corporations could take similar action.

“At the moment there is no call to action, but if that were the case, for example if a real law or an electoral measure were proposed, we would certainly activate our driver base,” said a Lyft spokeswoman.

Uber and DoorDash said they currently have no specific plans for an outreach campaign. Uber emailed all drivers across the country in August setting out its proposal for a change in the law to combine independent contractor status with some perks.

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