Regulation

California Voters Liberate Ride-Share Drivers From A.B. 5

The lawmakers who passed A.B. 5 ignored the many benefits of contractor status.

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California voters in November said no to rent control, increased property taxes, diversity quotas in government and college admissions, and burdensome regulations on dialysis clinics. But they said yes to Proposition 22, which allows Uber and Lyft drivers to remain independent contractors, putting the kibosh on state legislators' attempts to control how those companies classify their workers.

Uber and Lyft were among the countless companies (and workers) who stood to suffer from Assembly Bill 5, a 2019 law aimed at forcing companies across numerous industries to convert their freelancers into employees. The latter category comes with a spate of government-mandated benefits, including health care, paid time off, compensation for expenses, and a minimum wage.

But the lawmakers who passed A.B. 5 ignored the many benefits of contractor status. Foremost is flexibility: The gig model means ride-share drivers can choose their own hours and work when they please—an arrangement that would be replaced by shift work should those companies be forced to classify every driver as an employee.

Gig work also entails lower barriers to entry. As it stands, virtually anyone is able to drive for Uber and Lyft if he meets a few basic requirements, giving economically vulnerable populations an opportunity they might not otherwise have. A study conducted by Beacon Economics LLC found that if Proposition 22 had not passed, Lyft would have had to lay off at least 219,547 drivers in the Golden State. That appears to have mattered more to workers than to legislators. Among ride-share drivers in California, 60 percent favored Proposition 22, according to a poll commissioned by the publication Rideshare Guy.

Thanks to California voters, drivers will join a slew of other professions that have been exempted from A.B. 5 in the last year after legislators conceded that their one-size-fits-all approach threatened to hurt the very workers it was supposed to help. That includes hairstylists, real estate agents, insurance agents, lawyers, accountants, doctors, dentists, artists, musicians, photographers, journalists, and translators. In fact, as legislators kept granting exemptions, A.B. 5 targeted very few businesses other than Uber and Lyft.

A.B. 5 was crafted in response to Dynamex Operations West v. Superior Court of Los Angeles, a 2018 California Supreme Court case that established a rigorous test for labeling a worker as a freelancer instead of an employee. The case specifically addressed truckers, who have since been exempted from the legislation.

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  2. California voters in November said no to rent control, increased property taxes, diversity quotas in government and college admissions, and burdensome regulations on dialysis clinics. But they said yes to the politicians who push those policies.

    1. The Commie staff at unreason will do anything, propaganda-wise, to help the Commie politicians.

      1. “The Commie staff”

        LOL

        Literally every policy Reason.com promotes is intended to make Charles Koch even richer. I knew some self-described “commies” in college and that’s not how they behaved.

        #InDefenseOfBillionaires

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  3. Uber has passed the buck to the consumer. Now we have to pay 2 dollars extra for workers benefits in every transaction with Uber eats, Fuvk that. Door dash isn’t charging 2 bucks extra. So now ubereats drivers – go fuck ya selves. And no tip,

    1. lol… Did you think it was Okay to STEAL your ride from taxpayers or what?

    2. Who did you think was going to pay those surcharges? Did you think the costs would be miraculously paid with fairy gold and rainbows?

      DoorDash hasn’t been singled out by regulators to the same degree that Uber was. But eventually, they are going to have to cover all the same costs. Where do you think that money is going to come from? Ultimately, everything is paid for by us consumers. Grow up and deal with it.

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  5. But the lawmakers who passed A.B. 5 ignored the many benefits of contractor status.

    No shit, Sherlock. You act like you’re surprised, like maybe they just overlooked the benefits and didn’t think about this carefully. They don’t care. This is about putting a boot on the neck, nothing more.

    1. The media in California are uniformly Progressive, so they support Democrats and whatever Democrat politicians come up with. The AB5 bill was a repayment by the state politicians to the unions who give them money – a really simple payment for services.
      In spite of media support for AB5, the people in California decided to look at the thing as a stand-alone law, neither Democrat nor Republican, as they did for all the other propositions. Some point out to the money spent to cut out drivers from the bill, but consider the proposition to reinstitute racial preferences. The money spent in favor was about 11 times that spent in opposition, yet it failed.

      1. The money spent in favor was about 11 times that spent in opposition, yet it failed.
        Only dirty money has an impact on elections. We need to ban the use of dirty money in elections.

        1. Bitcoin YES, Shitcoin NO.

        2. What do you classify as “dirty money”? And who decides? Your thesis is bullshit.

          1. Carter, that was sarcasm. I think…

  6. They shouldn’t have exempted journalists. It was hilarious watching all those assholes who practically campaigned for this bullshit lose their jobs because of it.

    1. Like all ignorant, petty dictator assholes, they (1) don’t really understand the consequences, intended and other, of the laws they demand, and (2) never, never expect the laws to apply to them.

  7. In California, the voters have to use propositions for the peoples’ will to prevail over their own government.

  8. Used to be you could work 1099 set your own hours and rates and be a sole proprietor. Now most companies won’t touch it due to IRS rules so you’re forced to become a “field employee” of a contracting agency. And the company who you contract with pays a multiplexer. Fees to keep the taxman at bay.

    All so they could make sure to get that withholding instead of the quarterly tax payment. Government is a drug addict with an army.

    1. Sorry that was “multiplier” and not “multiplexer”.

    2. In my experience that change was underway 30 years ago. As I heard the explanation in the 1990s, there had been a “safe harbor” provision that waived penalties if you were retroactively reclassified as an employee. Then the IRS changed to no safe harbor and (again, as the story was told to me) they would collect back taxes from both the employee and the employer. So if you should have had $10,000 withheld the IRS would collect $20,000 in total. So there were lots of contracting agencies formed to take a big cut of salaries in return for keeping the IRS happy.

  9. The pic of the license plate is inaccurate. It should read:

    California
    Uber
    alles

  10. AB 5 may have gone too far, but the status quo doesn’t go nearly far enough. As long as federal law allows companies to opt out of state employment law by invoking arbitration states need to provide an alternative means to enforce employment law. It’s OK with me if Uber is totally destroyed as a result of labor law enforcement. The company has no respect for the law.

    1. Are you retarded? What law did they break? If I made a law that said all reason commenter will have a 100% income tax and the exclude every single person except John f Carr, would that be okay to you?

      1. He’s a crab – any time he sees an opportunity for another crab to climb out of the bucket, he grabs them and pulls them back down.

        Gotta keep those indians of the reservation and all that.

    2. Yeah, fuck all those people who like the current arrangement and demonstrate it by continuing to work for Uber.

      Try minding your own fucking business for once in your life, you might find it soothing.

    3. We all need to opt out of federal law. Cut about 99 percent of the so-called “laws” – which include regulations imposed by un-elected bureaucrats – and we get back to the government that the authors of the Constitution intended.

  11. The lawmakers who passed A.B. 5 ignored the many benefits of contractor status.

    They didn’t ignore it, they just prefer that sweet union money to the rights of individuals.

    1. Yeah the cunt that proposed it is an exec for a San deigo labor union

    2. This is why it’s gotten soooo frustrating to read Reason. This new round of left “libertarians” like Binion and Suderman are naive to the point of being laughable. The are always giving the stated reasoning of politicians the benefit of the doubt. They didn’t ignore the benefits of contract labor, they want to kill contract labor because it gives people silly ideas about individual sovereignty and allow for actual unsanctioned competition in the labor markets. In other words, it’s anathema to the only actual goal that these people are capable of achieving – the acquisition of more power.

      “It’s not that they’re corrupt and on the take, they would admit that if the were. Nope, they just don’t understand the consequences and they would do the good thing that I want if we just explain it to them nicely.”

      That is seriously they line they take on almost every article. When every single policy just happens to hugely benefit (as an unintended consequence) a small group of people that just happen to have a giant lobbying group behind them like unions, don’t you have to ask yourself if the reason they’re giving the public for a particular policy is 100% full of shit. The people that used to write on this blog everyday understood this and didn’t set kneel to their default position when responding to people with power.

  12. Why is this a story here now? Was it crowded out all that time by Trump “news”?

    1. See the byline at the top. This is a “reprint” from the hardcopy edition of the magazine. Those are often several months behind the initial announcement. They are supposed to be deeper and more insightful than the electronic-only articles – and sometimes they are.

  13. Prop 22 happened because stacks of money were thrown at CA legislators. It even included a sweet retirement gig for POS Barbara Boxer as a paid Lyft “consultant”:

    https://www.politico.com/amp/news/2020/01/07/barbara-boxer-joins-dc-lobbying-firm-095196

    “How do you abuse power when you’re out of power?” Boxer asked.

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