Uber will not reclassify its drivers from independent contractors to employees in light of a new bill adopted in California, largely because the law does not specifically require them to do so, the company's chief legal officer argued Tuesday.
"Unlike some of the rhetoric we have heard, AB5 does not automatically classify all stage share drivers from independent contractors to employees," said Tony West, Chief Legal Counsel at Uber, in a press release with reporters. “AB5 offers no benefits to drivers. AB5 does not give directors the right to organize. In fact, the bill currently says nothing about drivers with shared drivers. "
The bill in question, Assembly Bill 5 (AB5), codifies a recent ruling from the California Supreme Court, making it much more difficult for companies like Uber to classify drivers as independent contractors. It anchors the so-called "ABC test" to determine whether someone is a contractor or employee. A form of an ABC test is already law in many states, including Massachusetts, Virginia and New Jersey.
West said Uber could pass the ABC test because drivers don't have & # 39; core activities & # 39; to be. "According to that three-part test, it is arguably the highest benchmark that a company must prove that contractors are doing work" outside the normal course of business "of their company," West said. "Several previous statements have shown that the work of drivers is outside the normal course of business at Uber, which serves as a technology platform for different types of digital market places."
West is right to say that the bill does not automatically turn every Uber driver into an employee. Much of that work will take place behind the scenes in California's regulatory authorities, where unemployment insurance claims, employee compensation and other individual tests are filed.
But the argument that his drivers are not a & # 39; core & # 39; for his company, certainly raises a few eyebrows. West said that Uber plans to follow AB5 if it is transposed into law next year, but it will continue to try to prove that it is not under its legal framework.
AB5 also exposes Uber to more lawsuits from prosecutors in cities and states. The bill contains an amendment that authorizes the state attorney general and every prosecutor "from a city with a population of over 750,000" to submit a writ of execution if Uber is found to violate its provisions. (The population of San Francisco is around 750,000.)
San Francisco prosecutor Dennis Herrera seems interested in such a job. "The state doesn't necessarily have the means to handle every case," he said in a statement, according to the San Francisco researcher. “City attorneys, district attorneys, and other local prosecutors are a force multiplier when it comes to protecting employees and consumers. It is useful to have effective enforcement. You do this by offering local prosecutors the legal means to do the work. "
Asked if the company could afford a potential flood of lawsuits, West was cautious. "Uber is no stranger to legal battles," he said. "I think that is one of the reasons why I have my job." In other words, Uber is accustomed so accused that it is not clear that AB5 offers unique challenges in that regard.
West claimed that Uber never lobbied & # 39; against AB5. The company has met with several stakeholders, including Governor Gavin Newsom, lawmakers and trade unions representing drivers. The proposal of the company to set a minimum wage of $ 21 per hour for drivers, to pay free time, and to compensate drivers who were injured while working was rejected by lawmakers before the law was passed.
Now the company plans to dump $ 60 million into a campaign account, along with Lyft, to argue for a ballot initiative to ask voters to support the creation of a new classification for drivers with ride shares – to effectively help the thorny mess AB5 presents. West called it a "progressive third way" in which drivers get more protection, while Uber avoids being burdened with the costs associated with a W-2 workforce.
If Uber were eventually forced to reclassify drivers, this would most likely limit the flexibility of the driver, West said. "Drivers could not choose when they want to sign up when they want," he said. “They would work in shifts like any other employee works in shifts. Drivers could not choose to opt out when they wanted to, because there would be a fixed time that they would have to work, they would not be able to do that. "
Experts have said that there is nothing in federal or state law that prevents Uber from offering its drivers the same flexibility as employees as now as contractors.
Uber is clearly crazy about the passage of AB5. And other states seem ready to take their own actions with regard to action, putting further financial pressure on the unprofitable driving-hail company. But West said that regardless of these possible results, Uber would survive.
"This company is incredibly flexible and has endured enormous, huge challenges," he said. "And it has always been because of that stronger and more responsive."