Calif. Measure Could Help Independent Contractors Become Employees

Sep 12, 2019
Originally published on September 12, 2019 12:05 pm
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RACHEL MARTIN, HOST:

In California, lawmakers have passed a bill that could mean major changes for ride-share companies like Uber and Lyft. The legislation requires app-based companies like these to treat independent contract workers like actual employees, who would qualify for minimum wage, overtime, other benefits that they currently do not get. We're going to go now to Mike Isaac. He's a technology reporter for The New York Times who's been covering this. Hi, Mike.

MIKE ISAAC: Hey, how are you?

MARTIN: I'm well. So how big a deal is this for companies that - we now know Uber and Lyft are basically synonymous with app-based ride-sharing?

ISAAC: It's definitely something that they're fighting tooth and nail and hoping that they can avoid being called - calling their workforce employees at this point.

MARTIN: I mean, is it just about money for them - which, I guess, isn't insignificant. Uber hasn't exactly been making a profit.

ISAAC: Yeah. I mean, you know, to the core of Uber and Lyft and a number of the businesses in the gig economy is basically the idea that they can keep their entire workforce as contractors and not have to pay, you know, a number of the basic worker protections that normal employers in the U.S. have like, you know, many health care benefits and unemployment. And so the idea, for them, would be, if they do have to convert all of these - all of the, you know, millions of people who work for them as - into employees, it would make it much more difficult for them. What - the companies have said it would just make it much more difficult for them to keep most of them driving for them in the first place.

MARTIN: We'll come back to these companies, but just so we're clear, this legislation, though, covers other kinds of contractors, right?

ISAAC: Yeah, that's right. You know, nail salon workers and other sort of independent contractors are also under the bill. I think it's just a - the bulk of the attention is going to companies like Uber and Lyft just because, basically, their entire business depends on the contract workers being contract workers, basically.

MARTIN: But my understanding - Uber has just basically looked at this legislation - which, you know, the governor's going to sign. It's going to be a law - and said it's not going to comply. How do they get away with that?

ISAAC: So it's funny. Part of the bill essentially makes business-specific tests to determine whether someone is a contract worker or an employee. And Uber is saying that, look, the way our business works, the way that we follow this rule, if we do not fall under that test, this - even though the test makes it harder for them to say that these people are contract workers rather than employees, Uber still maintains that - look, they don't direct workers during the bulk of the time that they're working for Uber. We are a transportation company, not - and a transportation platform rather than a ride-hailing company and that it is not to the core of their business, so we are - the rule is not applicable to us. Now, whether that actually stands up in court and the many lawsuits and sort of cases they have going forward it is TBD.

MARTIN: Right. I imagine they're also concerned because California, as they like to say, often leads the way for the rest of the country. This would be a big hit for them if other states passed similar legislation.

ISAAC: No, absolutely. I think that this is just sort of the beginning for them. You know, if one state, like California, is pushing for this and it becomes popular, then it's just a worry, you know. And this goes just to the really to the crux of their business. It's how do you keep people as contract workers and keep your business going?

MARTIN: Right, and give them the benefits. Mike Isaac, author of the book about Uber titled "Super Pumped: The Battle For Uber." Mike, we appreciate it.

ISAAC: Hey, thanks for having me. Transcript provided by NPR, Copyright NPR.