Uber, Lyft, and others struggle to reach compromise on treating workers as employees

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

Faced with an imminent threat to their way of doing business, Uber, Lyft and other major companies that offer services on demand are trying something they have historically been reluctant to do: seek a compromise.

Eager to preserve the independent work agreements on which they have built their vast work forces, these companies have been pushing for a major negotiation that will meet the demands of labor groups and avoid a California bill that could force them to treat workers in the state as employees - a result that would hurt their hopes for long-term profitability.

In recent months, Uber, Lyft, DoorDash, Postmates and other companies have been in talks with officials of two unions, including local chapters of the International Union of Service Employers and Employers (Teamsters and Service Employees International Union) on a possible alternative legislation to Bill 5, which is in process in the state senate.

The proposal, whose details are still in the process of being changed, would allow companies to continue treating workers as independent contractors while providing them with some benefits and protections typically reserved for employees. (The California Labor Federation, which represents the majority of the unions in the state, remains committed to obtaining full employee status for on-call workers.) At least two of the companies, Postmates and DoorDash, have also commissioned surveys to find out what the agreement with Californians would be like.

The longer the discussions last, the greater the pressure on the companies to secure an agreement. Last week, a SEIU official in New York State criticized a bill that attempts to achieve a similar balance in which sporadic and temporary workers (gigs) remain contractors but qualify for some benefits. In an opinion article in the New York Daily News, the president of the local section of SEIU in New York, Hector Figueroa, called the bill a "gift for companies that hire freelancers" that "chooses which labor laws will apply to independent workers. "

"The Teamsters believe that all California workers deserve to earn a living wage, benefits and be able to join with their co-workers so that they can set standards for their jobs," Doug Bloch, political director of the local Teamsters Union branch in California he said in a statement.

If it were to become law, AB 5 would codify and give additional legal force to the state Supreme Court decision of April 2018 known as the Dynamex decision, which created a three-part test for companies from all industries seeking classify their workers as independent contractors. Their most stringent requirement is that workers should be treated as employees if they provide a service that is fundamental to the business of a company. While Dynamex is now the law, AB 5 would ensure that workers do not have to file a lawsuit against companies one by one to make sure it is followed.

Treating their workers as employees would mean that technology companies would have to guarantee a minimum wage and overtime, pay Social Security and Medicare, and offer unemployment and disability insurance, workers' compensation, sick leave and family leave. They would also have to reimburse workers for mileage and maintenance of their vehicles.

Companies in demand say that this legal regime would hurt their ability to recruit workers to keep up with demand and add significant costs to their bottom line at a time when none of them is still making a profit. For Uber alone, the additional cost could reach up to 500 million dollars per year, according to a study conducted by capital research analysts at Barclays.

Echoing its arguments, the California Chamber of Commerce said last week that classifying drivers as driving passengers as employees "would undermine the innovation of a business model that has fueled the state's economic growth," which translates to in less flexibility for drivers and longer waiting times for passengers.

Historically, consultation and cooperation have not been preferred ways of doing business in the on-demand service sector. From the beginning, Uber and other on-demand platforms have faced challenges to their legality, from their classification of workers to their liability for accidents to their regulatory status. The predetermined response to such challenges has been to counterattack, both in the courts and in the arena of public opinion. Over the years, they have made several concessions to the demands of workers and clients, but as recently as earlier this year, Lyft sued the city of New York to avoid imposing a minimum wage requirement.

The main participants of services on demand have been equally disrespectful in their relationships with each other, fighting against workers and customers and using the occasional dirty trick to find an advantage. So that these companies are now harmonizing their messages and looking for parlay with some of the same parts that they have rejected for a long time, it shows how seriously they are taking the threat that AB 5 represents.

What the companies are proposing would be very similar to the general framework that the executives of Lyft and Uber presented in an opinion piece in the San Francisco Chronicle recently. It would include some type of wage protection, potentially linked to the state minimum wage; a portable benefits fund to which each company would contribute; and some type of formal workers' association through which contractors could express their concerns.

"The goal is to preserve the independence of drivers," Lyft said in a statement, "while guaranteeing a minimum profit floor, establishing portable worker-led benefits and creating a new partnership with work groups to manage the benefits that best they fit the individual needs of the driver. "

"The focus of DoorDash is on the development of legislation this year that preserves the flexibility and autonomy of Dashers' value while establishing protections and innovative benefits adapted to the unique nature of the work on our platform," said Max Rettig, DoorDash's Public Policy Chief, in a statement. Uber did not provide a statement, but confirmed his participation in the discussions.

Both Postmates and DoorDash conducted an early survey to read how California residents feel about the general contours of the legislative agreement.

"Modernizing a security network that decouples the delivery of benefits from a historic employment model (and enacts new protection floors for a mobile workforce) is hard work," said Vikrum Aiyer, vice president of public policy for Postmates, in a release.

"That's why we've been routinely inspecting Californians, including workers who use Postmates across the country, to understand their sentiment about the economics of on-demand jobs and how they see a new deal like the one we've been doing. with work, "he continued.

Uber and Lyft tried to mobilize drivers this month to press for their cause, citing the possibility of less flexible schedules and lower wages if they were treated as employees.

But some of those workers say they do not trust companies like Uber and Lyft to offer consistent salaries in the existing contractor model and favor labor protections mandated by the government.

Rebecca Stack-Martinez, who drives for Uber and Lyft, says she initially preferred to remain a contractor due to flexible schedules, but came to believe that AB 5 is necessary.

"These companies have had the opportunity to do the right thing for the drivers," said Stack-Martinez, who is also a member of the Gig Workers Rising labor group. "But I think the time has come for drivers to realize that Uber and Lyft can not be trusted to do the right thing. And, then, this legislation will be needed to force them to do the right thing, although I would say that most drivers would prefer to remain independent contractors."

Ultimately, the hope is that if these groups of workers and technology are able to reach some kind of agreement, the agreement could be proposed through some kind of legislative vehicle. One possibility is that it could be proposed as an amendment to the bill of the Assembly if its author, Assemblywoman Lorena González (D-San Diego), is open to it. Or, if AB 5 moves through the Senate faster than an agreement could be improvised, it could be presented as a separate bill, according to some of the companies. They refused to comment on how far the negotiations are, although they have confirmed that they have not yet reached an agreement with the workers.

"I'm glad that companies are realizing that they are not paying enough, but I have not yet heard any proposal from these technology companies that would really give their workers basic labor protections, collective bargaining rights and a voice at work. "Said Gonzalez. "I would also like to know if the associations of long-term shared-travel workers participate in these discussions."

The issue of the classification of employees is a division between many workers on demand, and even more when it comes to the possibility of a third classification of workers beyond the binary employee / contractor. For Stack-Martinez, the potential of a third legally recognized worker classification that combines the flexibility of being a contractor and the benefits and other labor protections afforded to employees is intriguing.

"If they were going to follow the path of the legislation and make sure that this was something regulated and not just promises on the part of the companies, I think the drivers would be totally in favor," Stack-Martinez continued. "But unfortunately, that's not on the table right now."

Other drivers, such as Nicole Moore, an organizer of an independent group of drivers in Los Angeles called Rideshare Drivers United, do not want to settle for less than what they would be entitled to as employees.

"If the courts try to say that we are actually employees, why would we want less than a job?" Moore said. "We do not gain anything by accepting that we are a third category."

"If we are going to negotiate our rights, let's do it in contract negotiation," he continued. "Not covered up between parties that are not even drivers."

But there is little disagreement when it comes to the proposal of a workers' association that does not work independently of the companies and, therefore, may come with conditions such as an inability to strike. Moore and Stack-Martinez want to avoid being part of a group that resembles the pseudo-drivers union in New York City, called the Independent Drivers Guild, which Uber agreed to create as part of a five-year labor agreement with the local union.

"It's a good conversation with the companies, but the next day there's no guarantee they're going to do what the drivers asked," Moore said. "That's what an association of drivers is, it's a company union. Basically they are luxury focus groups."

To help reaffirm the resolution of workers and their representatives, Uber and Lyft are not being shy about what is at stake in this fight. "A change in the job classification of travel-sharing drivers would be a risk to our business," wrote the opinion piece, Dara Khosrowshahi, Lyft CEO, Logan Green and Lyft chairman, John Zimmer. Lyft could lose an additional 290 million dollars per year, according to the Barclays report; recorded losses of 1.14 billion in the first quarter of 2019.

Companies in demand have thrived by using bilateral software markets to keep their labor costs in line with their income. The transition to more lasting relationships between employers and employees may require major changes in the way companies operate. Already, in New York City, where the minimum wage for companies that travel by bus incorporates the frequency with which the drivers of a company travel without passengers, Lyft has imposed a new rule that limits the number of people who can drive at the same time according to the demand of passengers in the area.

"This means that if there is little demand, you may have to drive to busier areas or wait to connect and drive once the demand recovers," reads a blog post on the company's blog.

Consider Deliv, a same-day delivery company that announced last week that it was transitioning its contractors in California to employees, in part, in response to the evolving regulatory landscape.

Deliv executive director Daphne Carmeli said the transition to an employee model is simpler because, on the one hand, the company has always paid workers by the hour and allowed them to schedule their shifts themselves.

As employees, Deliv drivers can continue to choose their own shifts, maintaining to some extent the flexibility to work when they want to work against what some economy companies have argued. The difference is that the company can now demand that once the workers choose the shifts, they have to come forward.

Regarding the business costs of the reclassification of contractors, Carmeli says that the transition in California will be neutral in terms of cash because the employee model is much more predictable and companies can spend less on things like sign-in bonuses during periods of high demand.

"When it comes to independent contractors, there may be lower costs of benefits and so on," he said. "However, you are dealing with the reality of drivers who may not appear and you may be beating faster. So it has the cost of acquiring the controllers, it has the retention costs of the controllers and all that funnel to manage."

As workers continue to agitate for basic labor protections in the United States, passage of the bill in California could set a precedent for regulating on-demand work. In the regulatory filings, Uber and Lyft warned investors about the risk of cities following the examples of New York City and now California and requiring them to reclassify drivers or treat them as employees. "Any reclassification of this type would require that we fundamentally change our business model and, therefore, have an adverse effect on our business and financial condition," Uber's presentation reads.

In one way or another, it seems that a certain degree of change is now inevitable.

This article was written and published in Spanish and has been translated into English via Google Translate. Click here to read the original article.

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