07/08/2019 | News release | Distributed by Public on 07/08/2019 20:26
California AB5 is currently up for debate and is important to many drivers. AB5 can have tremendous effects on rideshare and delivery drivers across the state. There are loads of benefits to being a part-time independent contractor, especially if you're a rideshare driver for Uber and Lyft, or a delivery driver for Amazon, DoorDash, Postmates, or Instacart. However, part-time independent contractors are not protected under the same state labor laws and federal labor lawsas full-time employees. That's why over 385,000 Uber drivers recently suedthe company, demanding that they are classified as employees and not independent contractors.
California Bill AB5
California bill AB5, currently up for approval in the California State Senate, aims to change that for independent contractors in the Golden State. If the bill passes, it will effect thousands of California independent contractors by reclassifying them as actual employees.
Proponents of the bill say that all workers deserve basic job protections. Meanwhile, companies like Uber and Lyft disagree, arguing that drivers are not employees because they use their own cars and set their own schedules.
We want to tell you the different sides and opinions about AB5 and how it may effect your independent contractor job as a rideshare driveror delivery driver.
What's the Difference Between an Independent Contractor and an Employee?
If you want to earn extra income, one of the easiest ways is to find on-demand freelance jobs within the gig economy, which is also known as the sharing economy. Basically, you do these jobs as an independent contractor, and notas an actual employee working for a company. This applies whether you're a dog walker for a pet care service, a piano teacher for a tutoring agency, or a rideshare driveror delivery driverfor an app-based, on-demand ridesharing service. We'll discuss the difference between an independent contractor and an employee in a moment.
Let's look at the pros and cons of being an independent contractor.
What is tax deductible for Uber drivers and Lyft drivers?
Click HEREto take a look at the long list of items you can deduct as a rideshare driver.
There are cons to being an independent contractor as well. CONS:
No access to…
How to Distinguish Between an Employee and an Independent Contractor
Several years ago, delivery drivers for the Dynamex shipping company sued their California employer. They were tired of being treated as independent contractors with no labor protections and no health benefits. The drivers felt that since they were forced to wear a Dynamex uniform on the job while using their own cars, as well as paying for their own car-related expenses, that they should be considered employees. In 2018, the California Supreme Court ruled in favor of the drivers, awarding them minimum wage payments and overtime pay.
The Court also developed a special test that businesses must use in order to answer the question, 'what is an independent contractor' as opposed to an actual employee. It's called the 'ABC test'.
To classify a worker as an independent contractor:
According to the ruling, if a worker does not meet all three of the above conditions, they must be classified as an employee. AB5 takes the California Supreme Court's ruling to the next level:
If AB5 passes in the State Senate, all independent contractors who are reclassified as employees by the ABC test must be granted the following by their employers:
Hundreds of thousands of rideshare drivers, delivery drivers, and other kinds of independent contractors in California could become employees and therefore qualify for the above labor protections.
Why Do Uber and Lyft Drivers Think They Should Be Employees?
Drivers have taken Uber to court, claiming they've been misclassified as independent contractors on purpose so Uber could save money. Remember the ABC test we mentioned? Rideshare drivers believe strongly that they do not meet the conditions for independent contractors and should be reclassified as employees. Regarding condition A): The worker must be free from the control and direction of the company in connection with the performance of the work.
Regarding condition B): The worker performs work that is outside the usual course of the company's business.
Regarding condition C: The worker owns an independent business that does the same kind of work as the hiring company.
These three reasons are why political experts believe that Uber and Lyft will have no choice but to reclassify thousands of independent contractor rideshare drivers as employees.
Why Don't Uber and Lyft Want The AB5 Bill to Pass?
Uber and Lyft are adamant that their drivers do not qualify to be employees.
What Happens If The AB5 Bill Passes?
Will the Passing of Bill AB5 Provide More Protection For Rideshare Drivers?
In some cases, absolutely. The bill will force companies like Uber and Lyft to offer more protection for their drivers. For example, a big dilemma that rideshare drivers are talking about right now is what to do when a prospective passenger turns out to be an unaccompanied minor. In other words, is there an age limit for Uber passengersthat drivers must enforce, even if it denies them a payment?
If AB5 passes, will Uber and Lyft offer better protection for drivers who find themselves picking up an unaccompanied minor? This is one of the questions that drivers hope will be answered if AB5 passes in the California State Senate.
If AB5 passes, thousands of California independent contractors, including Uber and Lyft drivers, will more than likely become employees of the companies they drive for. They will receive the same labor protections and benefits that regular employees receive, such as overtime pay, unemployment insurance, minimum wage guarantee, workers' compensation, Social Security contributions, and more. Also, companies like Uber and Lyft will need to provide more labor and legal protection for their drivers. If the bill passes, the companies would need to address that the change may result in higher prices for consumers, or even bankruptcy for the companies themselves.The real winner could be the state of California, which would suddenly rake in $7 billion in tax revenues. No matter what side you're on, AB5, if it passes in California, will be a landmark decision that could effect the future of independent contractors across the United States.
By Rob Izenberg - HyreCar staff writer.