In its 2018 decision, the state Supreme Court ruled that workers should be considered employees if they perform a task that’s part of the “usual course” of a company’s business. Most legal experts concluded that driving was central to Uber’s business and that drivers must be considered employees under the ruling, said Veena Dubal, a professor at the University of California Hastings College of the Law.
This May, the state’s Assembly passed a bill that would extend the ruling in certain respects and limit it in others. The court ruling applied mainly to minimum wage and overtime laws, while the legislation, Assembly Bill 5, would apply to all aspects of employment, including unemployment insurance, workers’ compensation and paid sick days. At the same time, the bill exempted certain high-paying professions from the Supreme Court ruling, such as doctors and real estate agents.
Over all, millions of workers in the state could be affected by the legislation, including construction workers, janitors, house cleaners, cable installers, truckers and delivery drivers.
In July, the State Senate will hold hearings on the measure. Legislators working with Uber and Lyft could attach an exemption for drivers or write separate legislation to do so.
Despite the S.E.I.U.’s insistence that it supports the bill and full employment status for drivers, the union appears willing to continue negotiating with Uber and Lyft. It has created what it calls a “national bargaining committee to provide national leadership on the negotiations” with the companies, according to an email dated June 21 from Ms. Conroy, an executive vice president of the union, that was reviewed by The New York Times.
At stake are billions of dollars in potential costs for the two companies. Industry officials have estimated that relying on employees is about 20 to 30 percent more expensive for gig-economy companies than relying on contractors. In its filing for an initial public offering earlier this year, Uber told investors that having to classify drivers as employees would “require us to fundamentally change our business model, and consequently have an adverse effect on our business and financial condition.” Lyft’s filing included a similar warning.
This spring, the companies won a victory when the general counsel of the National Labor Relations Board, an appointee of President Trump, concluded that drivers are contractors, meaning they effectively lack the protections of federal labor law. The Trump Labor Department issued a similar verdict, through a so-called “opinion letter,” a few weeks earlier. But California law would supersede those decisions in most respects.