Although rideshare hit a plateau last year, business is picking up again, and Uber and Lyft are facing shortages that may force them to further incentivize their drivers to come back to work. Even if the offers are sweet, many drivers have told reporters they are holding out for better ones, even though Uber has said wages will go down again once the workforce comes back.
One complaint that has surfaced is bitterness about the passage of Proposition 22 last Fall, which California voters approved by a large margin. This legislation, which was opposed by labor groups, exempts the two companies from having to classify their workers as employees, but must offer them basic benefits like minimum hourly wages.
Unfortunately, the exceptions approved under Proposition 22 fly in the face of current state law regarding worker classifications. But when California’s Labor Commissioner sued Lyft and Uber for misclassifying its drivers as independent contractors and thereby committing wage theft earlier in 2020, both companies threatened to leave the state.
How AB5 has changed California’s employee classifications
In 2019, Assembly Bill 5 (AB5) was passed, codifying a California Supreme Court case, Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018). This landmark case created the presumption that any hired worker can be classified as an employee, and will thus enjoy basic labor protections for employees guaranteed under state law, including minimum wage, sick leave, unemployment and worker’s compensation benefits.
AB5 also includes and expands on the three-prong test that was in the original ruling, which assesses if a worker has been misclassified, and also hands the burden of proving it to the employer. To classify a worker as an independent contractor, the employer must show:
- that the worker is free from the control and direction of the hiring entity in connection with the performance of the work
- that the work that this person is performing is out of the usual course of the hiring entity’s business
- that the worker is typically engaged in an independent, established trade, business or occupation
Even though Californians enjoy some of the strongest labor laws in the country, workers who are not aware of these protections may find themselves misclassified, underpaid or wrongfully terminated. Because employment disputes can be complicated, it can help to have experienced legal counsel serving Pasadena and surrounding areas that will advise you on current law and help you build a case that will defend your rights.