California Independent Contractor Law Could Mean Uber, Lyft Drivers are Employees

Even though Gov. Gavin Newsom signed a new California independent contractor law last week, Uber and Lyft drivers are still unsure whether they are classified as employees.

For years, Uber and Lyft drivers have been a big part of what is known as the gig economy, a collection of businesses that have sprung up due to the proliferation of phone apps that make it easy to have food and goods delivered. Uber and Lyft drivers transport paying customers from one place to another. Grubhub, DoorDash, and Postmates deliver food to your door from any restaurant you choose. The drivers who work for all of these companies have always been considered independent contractors, but more and more lawmakers and workers themselves are questioning whether independent contractor is not the right classification.

By not considering these drivers employees, Uber, Lyft, Grubhub, DoorDash, Postmates and other companies do not have to provide unemployment insurance, minimum wage, meal periods, rest breaks, health insurance, sick days and more. By avoiding the investments they would be required to make in employees, these gig economy businesses have produced millionaire or billionaire executives.

The signing of Assembly Bill 5 changes the standards California will use to classify workers as independent contractors, effective Jan. 1, 2020. The new law stipulates that a worker is an employee if the job performed is part of the company’s core business, if a supervisor instructs how the work is to be performed or if the worker is not employed in a separate trade or business. The new criteria was developed after a California Supreme Court ruling in 2018 laid out these standards.

According to the Los Angeles Times, the state of California’s employment regulators determined nearly a half-million workers were incorrectly classified as independent contractors.

Ramifications of California Independent Contractor Law

Uber, Lyft and other gig economy companies are looking to fund a ballot measure in California that would allow the companies to be exempt from the new law. Assembly Bill 5 already excludes doctors, architects, real estate agents, accountants, graphic designers and many other professions. Hairdressers, barbers and manicurists are exempt from the new law if their clients pay them directly for their services, they are allowed to set their own schedules and to establish their own rates for services.

If gig workers are allowed to be considered employees, they could unionize, in addition to receiving the benefits employees are provided. Unemployment insurance, subsidized health care, paid parental leave, overtime pay and the current $12 minimum hourly wage in California could all belong to drivers for Uber, Lyft and the others.

According to The Verge, Assemblywoman Lorena Gonzalez (D-San Diego), who co-authored Assembly Bill 5, said of Uber and Lyft, “These companies have been in existence for years now. And they’ve known that their drivers have these complaints and these problems, and they’ve done nothing to address it. And they’ve said many times that they were going to address it, and they haven’t.”

The California independent contractor law will most likely continue to see battles with Uber and Lyft, especially after a Trump appointee on the National Labor Relations Board said in May in an opinion that ride-hail drivers are not employees, but are independent contractors.

U.S. Uber drivers aren’t the only gig economy workers who feel they should be classified as employees. In Britain, lawyers in a Supreme Court case are also fighting the independent contractor classification. 

Join a Free Uber & Lyft Class Action Lawsuit Investigation

If you work as a Lyft or Uber driver in California, you may have been misclassified as an independent contractor, and you may qualify to join this California independent contractor class action lawsuit investigation.

Get a Free Case Evaluation Now