Uber and Lyft’s Worst Nightmare Is Coming True in California

A newly passed law would require rideshare companies to treat their drivers as employees and provide them with benefits like health insurance.
September 11, 2019, 5:32pm
A protester holding a sign reading "Uber: Pay drivers a living wage."
A protester outside Uber's San Francisco office. Photo by Michael Short/Bloomberg via Getty

Legislators in California passed a bill Tuesday that signals an existential threat to the gig economy: It requires companies like Uber and Lyft to treat their drivers as employees, making them eligible for healthcare, paid parental leave, and a $12 minimum wage. It also affirms their right to organize unions and bargain collectively over wages and working conditions.

The legislation, which Democratic Gov. Gavin Newsom is expected to sign into law, could affect upwards of a million Californians, according to Rebecca Smith of the National Employment Law Project. This would include not only rideshare drivers but also janitors, nail salon and construction workers, and food-delivery couriers and bike messengers.

The bill, authored by Democratic assemblywoman Lorena Gonzalez, codifies a 2018 California Supreme Court ruling that made a clear distinction between contractors and workers who should be considered employees — specifically, whether a worker performs a task that is central to the functioning of the business. (For example, Uber drivers, without whom the ridesharing platform/taxi company would not exist, should qualify as employees.) The right to organize unions is especially relevant to Uber and Lyft drivers, who've been attempting to organize as a way to push back against what they say are substandard working conditions and low pay.

Major "gig economy" companies have been treating this legislation (and bills like it elsewhere in the country) as a direct assault on their entire business model. According to Vox, Uber, Lyft, and DoorDash have pledged to spend $30 million each on a ballot referendum to either be exempted from the law or overturn it altogether.


Lyft sent a notification through its app to drivers in California Wednesday, asking them to call the governor’s office to fight the bill. It painted AB5 as a threat to drivers’ flexibility, warning that "you may soon be required to drive specific shifts and stick to specific areas."

A notification from Lyft

"Uber and Lyft have gotten a lot of attention because they have so publicly fought the notion that they have responsibilities toward their workers," Smith told VICE. "They overplayed their hand."

"Workers organized and showed up and talked about the real lack of flexibility in their jobs, that the employers were cutting their wages and increasing their own take of the fare and treating them poorly," Smith continued. "It's really uplifting to all of us in the labor movement to see workers organize and take on big business and big tech in its home state and win."

The struggle for workers’ rights in California may be a bellwether, notwithstanding a recent ruling from the Trump administration deeming gig workers contractors. "Everyone is looking to California right now," labor attorney Monique Ngo-Bonnici told NPR earlier this month. "And they're all following it with bated breath because they recognize that likely whatever happens in California is going to sweep across the country."

Two pieces of proposed legislation have been introduced at the federal level that would strengthen labor protections for workers in the so-called gig economy, including Sen. Bernie Sanders' "Workplace Democracy Act."


Workers involved in the campaign to pass the California bill said it was a huge victory for gig workers in the state but still only a first step toward getting a union, which they believe they ultimately need to secure their rights.

"If Lyft and Uber were even remotely decent companies that do what's right, things probably would change quite a bit with this new law," said Edan Alva, a 49-year-old who’s driven for Lyft for more than four years and campaigned for the bill. "But my sense is that without a union putting pressure on them, they will find all sorts of loopholes and ways to fight this in court."

"We are relentless in our fight to get workers rights and our ability to unionize, and we will not stop until we get what we're fighting for," Alva added.

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Brendan O'Connor is a freelance journalist working on a book about immigration and the far right for Haymarket.