AB5 fight intensifies during coronavirus pandemic
Critics of California’s AB5 law argue gig work could help economy recover
As unemployment numbers continue to rise and claims hit historic levels in California, many are turning to gig work to make ends meet. An Oakland-based think tank is critical of AB5 and is calling for its suspension. The law considers app drivers employees rather than independent contractors.
OAKLAND, Calif. - As unemployment numbers continue to grow and unemployment claims hit historic levels in California, some are turning to gig work to make ends meet.
“That income is gone and unemployment is not going to cover a lot of their costs, so this is a wonderful advantage for them to take ahold of, to make up those losses," said Patricia Mulholland, an Uber driver who lives in Sonoma.
The latest criticism of California's new law, AB5 suggests its standing in the way of helping the state's economy scratch back from the impacts of the pandemic. “Just when they need the flexibility, AB5 has come along and stifled them," said Graham Walker, the executive director of the Independent Institute in Oakland. "I don’t think Californians who are hurting can afford the limitations forced on them by AB5."
Free market think-tank, the Independent Institute penned an open letter to the governor and state legislature. It calls for a suspension of AB5, writing it's having "unintended consequences." “I think it would be the worst time to suspend it," said Assemblywoman Lorena Gonzalez (D-San Diego). These companies are billion dollar companies who are publicly traded, they have enough money to treat their employees correctly. “
Assemblywoman Gonzalez introduced the controversial bill and subsequent bills making adjustments to the law. The law requires employers to re-classify some so-called gig workers as employees and provide them with benefits like unemployment, health insurance and workers' compensation. It's drawn the ire of app-based giants like Uber and Lyft and prompted lawsuits from truckers and other freelancers. There has been mixed reaction from drivers. “A worker is a worker, cost of labor is at any place at any time is minimum wage and benefits, anything other than that is unacceptable," said Edan Alva, a Lyft driver.
“Nobody’s twisting their arm to do this, to create this business or be an entrepreneur on the road that’s the way I look at it," said Mulholland.
Mulholland is part of the coalition behind the November ballot measure that would exempt app-based companies from AB5, "Protect App-Based Drivers and Services." The campaign is funded in part by Uber, Lyft and Doordash. It was announced this week by the Secretary of State that the measure had received enough signatures to qualify for the November ballot. The group says if passed, it would also guarantee drivers more than minimum wage, a health care contribution and more. As well as ensuring the flexibility many drivers said they value.
Supporters of AB5 say it's up to the companies to ensure flexibility. Alva is part of "Gig Workers Rising," a movement of drivers fighting for better wages and benefits. He said AB5 was a giant step towards fair treatment of workers. “Does the fact that people are vulnerable and have to find work immediately and will work for any pay mean you can step all over them?” asked Alva.
Assemlbywoman Gonzalez says the pandemic has highlighted the need for these companies to pay into unemployment insurance and provide benefits to drivers. “They’re not only exempting themselves in the future out of basic protections for their workers," said Gonzalez. "But exempting their past due to the state, which means law abiding businesses and tax payers are going to have to pick up that fund.”
The legislative fight even reached former Vice President Joe Biden. The presumptive Democratic presidential nominee tweeted his opposition to the ballot measure, writing "gig economy giants are trying to gut the law." Biden has voiced his support for AB5 numerous times.
Lyft deferred to the coalition for this story. Uber recently released this internal analysis of impacts of driver reclassification. “Incredible that we have companies who want to exempt themselves out of basic labor protections for their workers," said Gonzalez.
“When people are free to offer their services, as independent contractors, they can find their niche, they can flex, they can find a way forward, they can support themselves," said Walker.
Uber and Lyft are also facing a lawsuit led by California attorney general Xavier Beccera accusing the ride-hailing companies of being in violation of the new law.