Uber Says It Won't Reclassify Drivers As Employees Despite New California Law

After California lawmakers passed legislation on Wednesday seeking to reclassify many “gig economy” workers from independent contractors to employees with additional benefits and protections Uber said it still does not plan to consider its drivers full employees.

The ride-hailing company told reporters Wednesday that its drivers will not be reclassified as employees, even if Assembly Bill 5 is signed into law as widely expected. Tony West, Uber’s chief legal representative, said the drivers will still be considered independent contractors because “drivers’ work is outside the usual course of Uber’s business .”

West described the company’s business as “serving as a technology platform for several different types of digital marketplaces.” 

Under the legislation which the state Assembly approved  on Wednesday and which Gov. Gavin Newsom (D) is expected to sign many gig-economy workers stand to gain new labor protections and benefits, like a minimum wage, unemployment and disability insurance, and the right to form a union.

The legislation clarifies the conditions under which a worker should be considered an employee. It says workers should be treated as independent contractors only if (a) they are “free from the control and direction” of the company that hired them, (b) their work falls outside the usual business of the company and (c) they are engaged in work in an independent business of the same type as the company’s.

Uber is claiming that its drivers “pass” that test and can thus be considered independent contractors. 

Uber, Lyft and other big tech companies lobbied extensively against the legislation . Their companies’ bottom lines would be dramatically affected if thousands of drivers were reclassified as employees for whom they’d then have to pay additional benefits.

Meanwhile, hundreds of Uber and Lyft drivers with the organizing group Gig Workers Rising protested throughout California last month, demanding AB5’s passage and a union for drivers.

One driver and organizer, Mostafa Maklad, told HuffPost in May that he drove between 40 and 50 hours a week with Uber and Lyft and that after taxes he was making less than minimum wage .

Uber and Lyft  have repeatedly suggested that drivers wouldn’t enjoy as much flexibility if they were made full employees. The companies have said they could meet some of the workers’ demands by establishing a drivers association and working with lawmakers to commit to things like minimum pay .

Gig Workers Rising called the tech leaders’ proposals “a watered-down version” of the demands drivers have been making for months.

With AB5 now expected to become law, Uber said Wednesday that it is pursuing “several legal and political options,” including a statewide ballot initiative in 2020.

Newsom’s office did not immediately respond to a request for comment on Uber’s remarks.