California Assemblies Bill 5 Targets Uber and Lyft

This week, the California legislature passed Bill 5, which defines market economy workers as employees and not as independent contractors. Although intended for Transmission System Operators (TNCs) Uber and Lyft, the bill, which will come into effect in 2020, could have significant effects on the economy of California, as well as that of the country. By forcing the new economy to adopt rules that are developed for the employees of the twentieth century, California is missing the opportunity to create a new class of workers, a hybrid of independent consultants and traditional employees.

The purpose of the AB5 is to ensure that TNC drivers are protected against the minimum wage and overtime and that companies pay workers' compensation and other social charges. However, unlike traditional employers, TNCs do not indicate the location, location, or duration of their drivers. Drivers choose their schedules, hours and locations. There is little reason to pay a more driver after more than eight hours of driving by choice, especially since Uber can not charge more for the customer, the ride is no different than any other ride.

Minimum wage laws are another disadvantage for TNC drivers. Activists suggest that drivers should be "on the clock" every time they are connected to the Uber app to accept rides – but again, drivers have the choice to accept or decline requests. It is therefore unclear why a driver sitting in a parking spaces but the down paths must be paid as a driver who actively moves the customers. The problem is further complicated as many pilots work simultaneously for Uber and Lyft, connect to both applications and accept the busiest or most promising route. Should these drivers be paid twice?

The bill assumes that TNC drivers all work full time. But this is not always, or even primarily, the case. Uber's "black" drivers usually work full-time, but as drivers of professional deliverymen with high-end cars, they perceive a high premium rate, so the minimum wage is not not a problem. Part-time student drivers are common, as are part-time drivers with a second job. Many drivers do not work on fixed hours, but rather set a revenue goal for the day, which allows them to give up at any time. A woman I spoke to led Uber after finishing his regular work nine to five hours. She works in San Francisco but lives in the East Bay area. instead of spending 90 minutes each afternoon in traffic jams, she takes her ticket for an hour, then returns home after rush hour.

Strict pay and overtime requirements may require TNCs such as Uber and Lyft to impose restrictions on their drivers, forcibly disconnecting them to avoid overtime or cutting ties if they do not accept a certain number of journeys per hour or per day. These constraints would be detrimental to the economic prospects of students and others earning valuable additional income. This could also be a net loss for passengers: Uber and Lyft have been a boon for travelers in low-density or busy areas to support the traditional taxi service, but if these areas can not support enough commutes, the service could be lost.

AB5 overturns the regulatory principle that it is written restrictively but is widely applied. Instead, it is written in general terms (defining "employee" with language such as "usual course" or "usually engaged") and applied in a narrow manner, with various exemptions in the bill for, among others , doctors, grant writers, quality artists and commercial enterprises. fishermen, with additional derogations from the Unemployment Insurance Code and the Social Protection Commission. Many companies straddle entrepreneurs and employees, as do transnational corporations. Uber and Lyft make the headlines, but the same issues apply to food delivery services such as DoorDash and Postmates. Today, apps help you find a handyman (TaskRabbit), hire a mover (Lugg) or use a freelancer to do almost anything (Fiverr.) Less visible to consumers Businesses and B-to-B websites connect a wide range of entrepreneurs, such as programmers. Any interference in this economic ecosystem could be detrimental to more workers than the help provided to TNC drivers. If a potential Boise programmer misses his big break with a customer in Chicago because of the way California interprets another programmer's relationship with an application in Santa Monica, many stakeholders suffer.

AB5 could even disrupt traditional small businesses far removed from the Uber and Lyft technology economy. Workers at many companies, from nail salons to pros nails to high-end yoga studios, are often independent contractors, for many of the same reasons as STN drivers. Work is either secondary to another job, or part-time by choice for more flexibility with family and school. By bundling these companies into a bill for multi-billion dollar startups, many small businesses could be crushed in California. Currently, AB5 exempts manicures, but only until 2022, and exempts certain other workers includes requirements, such as a hairdresser who delivers a 1099 form to a hair salon, that he is unlikely that poor and immigrant workers will fill.

For all problems with AB5, it identifies a significant problem. While TNC drivers are not employees, in the traditional sense of the term, Uber and Lyft claim that their drivers are independent, traditionally defined contractors, also miss the mark. Drivers do not negotiate their rates with customers or the TNC; the application sets the price and the customer's credit card is billed by the company, who then pays the driver. What transnational corporations and many other technology companies have created is essentially a new class of workers, a society for whom some controls (price and wages) remain in the hands of society, while others (hours, capacity to work for a competitor) are kept by the worker. .

California is missing a huge opportunity to define this new class of workers and adopt appropriate rules. A good starting point would be to exempt drivers from minimum wage and overtime requirements – as noted, drivers have the ability to decide when and where they work, and even how much they earn, by choosing to drive during the periods surtax – while requiring STN companies to pay unemployment and workers' compensation Solution AB5, which applies the laws developed a century ago for factory workers, is bound to turn against them or create unexpected consequences for workers and the economy.

Phillip Sprincin is a veteran of the United States Marine Corps who lives in the San Francisco Bay Area.