Update on AB5
Why do you value driver flexibility and independence?
I’m glad to be able to update you on the latest developments regarding Assembly Bill 5, which passed the California Senate last night and just passed the California Assembly.
Before I take your questions, I’ll start off by making three important points.
First, I want to say that I am incredibly proud of the package that the ridesharing industry put on the table. We’ve engaged in good faith with the Legislature, the Newsom Administration and labor leaders for nearly a year on this issue, and we believe California is missing a real opportunity to lead the nation by improving the quality, security and dignity of independent work.
Our current offer represents a new progressive framework that includes:
- Establishing — for the first time ever — a guaranteed minimum earnings standard that would provide stability for drivers while allowing them the flexibility to earn more, and work whenever, wherever and for whomever they choose;
- Bringing drivers access to robust portable benefits like sick leave and injury protection; and
- Real sectoral bargaining, giving drivers a voice in the decisions that affect their livelihoods, and which we believe would be a first for the modern economy.
So as you can see, we are not arguing for the status quo. Our proposal avoids the potential harm of forcing drivers to be employees, whether or not they want to—and the vast majority tell us they don’t want to be. And it would create legal certainty around the classification status of drivers. So we’re disappointed that we were not able to reach a compromise.
Contrary to some of the rhetoric we’ve heard, AB5 does not automatically reclassify any rideshare drivers from independent contractors to employees. AB5 does not provide drivers with benefits, nor does it give drivers the right to organize. In fact, the bill currently says nothing about rideshare drivers.
What AB5 does do is fairly straightforward: it inserts into the California labor code a new legal test that must be used when determining whether a worker is classified as an independent contractor or an employee. And that legal test is already the law of the state since the California Supreme Court handed down its decision in Dynamex over a year ago.
That legal test, called the “ABC test,” certainly sets a higher bar for companies to demonstrate that independent workers are indeed independent. Under that three-part test, arguably the highest bar is that a company must prove that contractors are doing work “outside the usual course” of its business.
But just because the test is hard does not mean we will not be able to pass it. In fact, several previous rulings have found that drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces.
Notably, AB5 actually limits the Supreme Court ruling in Dynamex because, due to eleventh-hour amendments to the bill, many industries are now exempt from the new ABC test that AB5 will codify into state law.
Governor Newsom has already committed to sign AB5, which would go into effect in January 2020. Because we continue to believe drivers are properly classified as independent, and because we’ll continue to be responsive to what the vast majority of drivers tell us they want most—flexibility—drivers will not be automatically reclassified as employees, even after January of next year.
We expect we will continue to respond to claims of misclassification in arbitration and in court as necessary, just as we do now. But we will also continue to advocate for the independence and choice that drivers tell us again and again in surveys, polls, focus groups, and personal conversations that they value most.
Today, drivers have control over when, where, and how they work. They can choose to work for any of our competitors at the same time, and many do. In the US, 92% of drivers drive less than 40 hours per week, and 45% of drivers drive less than 10 hours per week. This would all change dramatically if they were employees. We will continue to defend the innovation that makes that kind of choice, flexibility, and independence a reality for over 200,000 drivers in California.
Lastly, a few words about our plans going forward. We will continue advocating for a compromise agreement, and we were encouraged by Governor Newsom’s comments as reported by the Wall Street Journal this morning, that he’s fully committed to negotiating a solution. But we are also pursuing several legal and political options, including working with Lyft and other Internet platform companies to lay the groundwork for a statewide ballot initiative in 2020.
Uber and Lyft together have already transferred $60 million into a campaign committee account, and we are open to investing more to put us in the strongest position possible to run a winning campaign. We are hiring the best campaign team available, and we are working to expand the coalition to include other businesses who face uncertainty in the wake of AB5. We are confident that California voters and the millions of riders and drivers who use Uber will step up to protect these important work opportunities.
Importantly, our ballot measure will not ask voters to exempt us from AB5, even though nearly every other industry in California that works with independent contractors received an exemption from the ABC test through special amendments I mentioned earlier. Instead, we will ask voters to support the pro-driver policies we have advocated for: giving drivers access to benefits and an earnings floor and retaining the flexible access to on-demand work they enjoy today.
At Uber we embrace the challenge to improve work for drivers. But we will continue to defend our ability to enable on-demand, independent work. We continue to hold out hope that California lawmakers will seize the historic opportunity before them to dramatically improve the quality and security of independent work; strengthen the 21st-century labor movement; and protect California’s innovation economy.
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