California and Seattle are the latest battlegrounds for lawsuits involving ride-hailing apps Uber and Lyft. As the gig economy expands, the definitions of job and employee are growing with it. However, the business model of the gig economy can be particularly daunting for their independent contractors-those of who are usually not subject to certain benefits, like workers’ compensation, bargaining rights, unemployment insurance, and the like. The industrys’ near-complete deregulation makes it easy to find work and make money, but consequently makes it hard to be protected from poor business practices.
“Seattle’s law, passed in 2015, requires the city to select a union as the exclusive bargaining representative of the estimated 9,000 drivers in Seattle who work for Uber, Lyft and other services. The law was put on hold pending the outcome of the chamber’s lawsuit”, according to an article on Reuters.com, linked below. While Washington state allows their cities, such as Seattle, to regulate Uber and Lyft, the 9th circuit court took issue with which part of the ride fees were regulated. The courts are allowing the challenge by business groups.
However, in California, the Supreme Court has passed a decision that makes it harder for businesses to “classify workers as independent contractors rather than employees.”, according to the New York Times. The decision could “upend their business models”, mandating minimum wage, overtime, workers’ compensation, unemployment insurance, etc. laws to be followed by companies. The law creates a simpler definition of employee and independent contractor, by way of substituting the current “test” for another, more streamlined one. This test would be based on someone completing tasks relevant to the business of the company, rather than degree of supervision and other contingencies that currently determine employee status. As the New York Times describes this new test;
“By way of an example, the court said a plumber hired by a store to fix a bathroom leak would not reasonably be considered an employee of that store. But seamstresses sewing at home using materials provided by a clothing manufacturer would probably be considered employees.
In addition, a company must show that it does not control and direct the worker, and that the worker is truly an independent business operator, not just classified that way unilaterally.”
On display in either case is the standard mentality of “safety of workers is a hindrance to businesses.” This has been a hot-button labor topic for the past few years: for-hire drivers demanding protection and benefits. New York City’s’ Black Car Fund was established for this very reason. However, this was before the integration of app-based transportation. This is not the first time Uber and Lyft have been at the crux of these issues. A class-action lawsuit that came about in late 2017 stated that Lyft was docking twice the amount of the Black Car Fund fee (2.5%) from for-hire drivers-once for the fee paid by drivers, and once from the drivers’ actual paychecks. The company ultimately settled for $3 million earlier this year.