California's Move to Protect Gig Workers Will Mean Major Changes for Food Delivery Apps
Assembly Bill 5 would require companies like Uber Eats and Grubhub to treat contract drivers as employees.
On Labor Day, the Sacramento Bee published an op-ed written by California governor Gavin Newsom, one that detailed his support for Assembly Bill 5 (AB-5), a contentious piece of legislation that could change the way that gig-economy workers are both classified and compensated.
"[C]ompanies eager to save on labor costs identify workers as 'independent contractors' rather than employees," he wrote. "Workers lose basic protections like the minimum wage, paid sick days and health insurance benefits. Employers shirk responsibility to safety net programs like workers’ compensation and unemployment insurance. Taxpayers are left to foot the bill."
He urged state lawmakers to pass AB-5 which, he suggested, could become "a necessary and important step to improve the lives of working people." Apparently, some senators listened.
On Tuesday, the California Senate voted 29-11 to pass AB-5 and, a day later, the state Assembly approved amendments to the bill. It will now be sent to Newsom and, if that editorial is any indication, he's already uncapped his pen in anticipation of signing it into law.
As the San Francisco Chronicle explains, if or when this legislation becomes law, "hundreds of thousands" of gig-economy workers — including those who deliver meals for companies like DoorDash, UberEats, and GrubHub, as well as InstaCart shoppers and Postmates drivers — will be reclassified as employees, as of January 1, 2020.
“This isn’t perfect, but I think this goes a long way to protecting workers, legitimate small businesses, legitimate businesses that play by the rules, and we as taxpayers that have to clean up the mess when these businesses don’t provide enough for their workers,” Assemblywoman Lorena Gonzalez told The OC Register on Wednesday.
Unsurprisingly, Uber, Lyft, and DoorDash have already expressed their displeasure about the legislation — they've referred to it as "a cynical measure" — and have already pledged a combined $90 million to fight it. The Chronicle reports that the companies plan to sponsor a November 2020 ballot initiative; if passed, it would allow them to offer workers a guaranteed hourly minimum and provide some benefits, while still classifying them as independent contractors.
"We are working on a solution that provides drivers with strong protections that include an earnings guarantee, a system of worker-directed portable benefits, and first-of-its kind industry-wide sectoral bargaining, without jeopardizing the flexibility drivers tell us they value so much,” Lyft spokesperson Adrian Durbin jargoned in a statement. “We remain focused on reaching a deal, and are confident about bringing this issue to the voters if necessary.”
Lyft also sent out an email to its drivers, warning what could happen if the law passes. "As a result of AB-5, you may soon be required to drive specific shifts, stick to specific areas, and drive for only a single platform (such as Lyft, Uber, DoorDash, or others),” the email read, according to Fortune. It also asked its drivers to speak out in support its own ballot initiative instead of AB-5.
"At Instacart we have a diversified business model with full-time and part-time employees, but we have tens of thousands of shoppers who choose to use the platform as contractors so that they can have access to independent, flexible work that fits around their lives," an Instacart spokesperson told Food & Wine in a statement. "With AB-5, California had the opportunity to create a path for a modern workforce, one that creates security and flexibility for independent workers. Unfortunately, AB-5 missed the mark and offers a one size fits all solution that we believe is a disservice to millions of Californians. We remain committed to working with the Governor, legislators, labor advocates, and the voters of California towards a better solution for all Californians."
DoorDash echoed those sentiments. "We're disappointed that California lawmakers missed a major opportunity to create a groundbreaking approach that pairs the flexibility Dashers tell us they value most with the economic security they deserve," a company spokesperson told Food & Wine. "DoorDash is committed to passing a new law — in the legislature or at the ballot — that would create benefits and protections for Dashers, including a guaranteed minimum wage with the opportunity to earn more, access to benefits, and protections against discrimination and sexual harassment. We will continue working until we achieve this solution for the hundreds of thousands of Californians who turn to DoorDash to earn supplemental income and the tens of thousands of restaurants and small businesses throughout the state who are able to grow their businesses through our platform."
Food & Wine has also reached out to UberEats for its reaction to this week's Senate and Assembly votes. Regardless, it could be the beginning of a lengthy fight that stretches beyond California's borders as New York state is reportedly considering its own version of AB-5.