A landmark law disrupted the gig economy in California. But what comes next for Uber drivers?
Uber and Lyft drivers need to decide if they want to unionize, and how. Plus, legal and political challenges are looming.
The bill, AB 5, makes it harder for Uber, Lyft, and other gig economy companies to continue treating their workers as contractors instead of employees. As employees, drivers would be eligible for basic labor rights like a minimum wage and benefits like paid time off.
The state law’s passage was a stunning defeat for the ride-hailing giants, and it was seen as a major win for drivers who had long demanded greater pay and benefits.
But so far, drivers’ working conditions haven’t improved. Although many were excited about AB 5’s passing, dozens say they’re anxious about what’s ahead, and they shared concerns about losing flexibility and continued issues over pay in online driver groups and interviews with Recode.
As recently as this week, Uber drivers in the LA area reported seeing their share of surge bonuses drastically going down, and they say they plan to protest about it sometime this month.
“I don’t think that the companies at this point are going to deliver upon us better wages and conditions out of the goodness of their heart,” Tyler Sandness, a Lyft driver and organizer with the driver group Rideshare Drivers United, told Recode. “Their past behavior has been a constant downward trend on working conditions and pay.”
AB 5 doesn’t go into effect until January, and even when it does, Uber and Lyft have vowed to oppose the new legislation, saying that they will continue to treat their drivers as contractors. (Uber claims that its drivers aren’t core to its business and so the law doesn’t apply to them.) While Lyft hasn’t given as much rationale, it’s also said that it plans to continue classifying drivers as contractors.
Already, a legal battle is playing out in California courts about whether the new restrictions apply to rideshare workers. Uber and Lyft drivers have filed lawsuits against the company seeking damages and to force the companies to comply, and city attorneys may start doing the same. But Uber and Lyft are fighting these challenges — and as Uber’s chief legal officer said on a recent press call, the company is “no stranger” to legal battles.
That’s why Sandness and many other driver organizers argue that a union is necessary to advocate for workers at the bargaining table with Uber and Lyft — and ultimately win a fair contract. But it won’t be a simple path to getting there. Any effort to unionize may be a waste of time if the federal government under Trump blocks it. Drivers and city attorneys can sue Uber and Lyft to get the company to reclassify them as employees. But that could take a while — even years. And if drivers do go forward with a union, they’ll have to decide which union or unions (since they could be different ones for different areas) they will join.
Some rideshare drivers are organizing fellow workers with the support of established labor unions, such as the Transportation Workers Union of America, Teamsters, and SEIU. But if these groups move to formally organize, their efforts may be blocked by Trump’s National Labor Relations Board, which enforces federal collective bargaining laws and recently decided that gig workers do not have a federal right to form a union. So, if Uber or Lyft challenges their effort to unionize, the NLRB would likely rule (at least, under the current administration) that drivers can’t form a union because they are independent contractors.
California union leaders are torn about which long-term strategy to pursue: Should they try to work with Uber and Lyft to pass a law that would let all drivers negotiate an industry-wide contract with companies, known as sectoral bargaining? Or should they try to pass a separate state law that gives gig workers the right to form their own labor unions that negotiate contracts with individual companies, since they may be blocked from doing so under federal law?
In short, there is no clear path forward, but what happens next could set the standard — not just for the gig economy in California but for other states following its lead.
Uber declined to comment for this story. A spokesperson for Lyft told Recode that the company wants to achieve a solution for drivers that “balances flexibility with earnings guarantees and protections” — and that it’s prepared to take the issue to California voters if it can’t come to an agreement about working conditions. Lyft, Uber, and on-demand food delivery company DoorDash have poured $90 million into a ballot initiative that would exempt them from regulations.
“We just have a few months before the bill is implemented,” Steve Smith, a spokesperson for the California Labor Federation, which represents unions such as SEIU and Teamsters, said. “As much as we would like to celebrate for another month, we really have to get to work answering a lot of these tough questions to make sure that [AB 5] does what we intended it to do.”
Driver fears and organizing
Many drivers are worried that because of AB 5, Uber and Lyft will limit workers’ flexibility. Both ride-hailing giants have already warned drivers they might be forced to only drive during scheduled shifts approved by the company, rather than the times they want.
Labor experts and organizers have said that the law doesn’t force companies to do this and labelled the threats as scare tactics. Uber and Lyft have responded that more expensive and restrictive labor standards would force them to make these kinds of changes to effectively run their businesses.
Some driver organizers see unions as one way to negotiate decisions like these.
But among the many questions is how exactly to organize hundreds of thousands of disparate drivers in different locations. Some of them communicate on Facebook, WhatsApp, and Reddit, but the participants only constitute a small percentage of drivers overall. Another question is how to make sure that one union is capable of truly representing all these drivers’ needs.
“Unions are just big bureaucratic institutions,” law professor Veena Dubal, who researches the gig economy, told Recode. “The things that keep unions in line are workers themselves.”
Several grassroots driver groups have emerged in the past few years, connecting drivers in online groups as well as at face-to-face meetings, protests, and rallies.
One of the leading groups, Rideshare Drivers United, which has 5,000 members largely in Southern California and helped organize a driver strike around the Uber and Lyft IPOs, recently announced that it’s receiving support from Transportation Workers Union of America (TWU).
TWU represents airline attendants, Amtrak workers, and New York’s MTA employees, among others. According to Nicole Moore, a driver organizer with Rideshare Drivers United, the partnership is nascent — drivers are still figuring out if they want to form an independent union, distinct from TWU, or to join as a chapter of its larger national unit.
”What we bring is resources, experience, political operations, and an organizing methodology,” said John Samuelsen, international president of TWU. “These are some of the things rideshare drivers in California are thirsting for.”
“Six months ago in a room full of academics and unionists, people would tell you that AB 5 and employment rights would never happen — but we didn’t take no for an answer,” Moore told Recode. “We are going to take our efforts into ensuring that drivers have a floor of labor standards, and we are going to build up off that. As employees, we have the right to form a union.”
Another leading driver group, Gig Workers Rising, which counts 10,000 members in its network, is also organizing drivers, largely in Northern California. Shona Clarkson and Edan Alva, both organizers with that group, said they think it’s still far too early for drivers to officially unionize until they gain more organizing muscle.
Alva told Recode he’d like to see “as many possible drivers join the conversation” and then “have some form of legitimate referendum” before going forward with any union.
Around 15 percent of Gig Workers Rising’s annual budget comes from SEIU, according to Clarkson, but Clarkson said that the group operates independently and will ultimately support whichever union has a majority of driver support.
Part of the split between driver groups stems from tension leading up to the vote on AB 5. Representatives from SEIU and Teamsters, two of the largest unions in the nation, were reportedly meeting with Uber and Lyft in backdoor negotiations — without driver organizers present. According to the New York Times, Lyft and Uber were discussing a deal that would exempt drivers from being employees in exchange for securing union bargaining rights.
Despite reports of its private negotiations, SEIU publicly backed away from advocating for such a compromise. Nevertheless, the reported behind-the-scenes dealings caused ill will with some driver organizers, who feel that larger unions like SEIU left workers out of important conversations.
Now, these unions appear split on the best way to move forward. The California Labor Federation, an umbrella group that represents the largest unions in the state, says some unions want to pass a law that allows gig workers to negotiate one contract that covers multiple employers, known as sectoral bargaining. In recent weeks, the group has been circulating drafts of legislation for what that would look like, eliciting feedback from union leaders.
Smith said that many unions have concerns that industry-wide bargaining may end up giving too much leverage to Uber and Lyft. That’s because it would be hard to organize hundreds of thousands of drivers and negotiate on behalf of such a large group. No union in the US has ever tried to do so on such a large scale, Smith said.
The legal battle ahead
While unions and ride-hail drivers debate the best way to form a union, gig workers can also take their cases directly to court. And they have a stronger shot at winning, thanks to AB 5.
In fact, right after Uber’s chief lawyer said the company doesn’t need to comply with AB 5, labor attorney Shannon Liss-Riordan filed a class action lawsuit on behalf of Uber drivers.
The lawsuit urges the courts to issue an injunction that would force the company to comply with AB 5 and make sure their drivers are properly classified.
The problem with this strategy is that Uber and Lyft require drivers to sign arbitration agreements when they’re hired, in which they agree to resolve disputes through private arbitration instead of through the courts. More than likely, Uber will try to get the judge to move some of the claims to arbitration, a quasi-legal system with no judge, no jury, and nearly zero government oversight.
Uber and Lyft drivers could argue that they’re not bound by the arbitration agreement they signed because of an exception for transportation workers in the Federal Arbitration Act. That argument recently persuaded a panel of judges in the eastern Third Circuit Court of Appeals.
Also, cities can go after companies like Uber and Lyft in public courts. San Diego’s city attorney recently filed a lawsuit against Instacart over employee misclassification, and San Francisco’s city attorney has signaled that he may be willing to do something similar. Unlike driver-led lawsuits, these cases would be guaranteed to play out in public courts.
If all that sounds incredibly complicated, that’s because it is. The legal battle ahead could be a long process, according to several lawyers and legal experts Recode spoke with.
That’s why many driver leaders on these issues say they’re proceeding on two fronts: the courts as well as labor organizing.
Everything that’s happening in California could end up having a national impact, too. Sen. Bernie Sanders (D-VT) has already introduced a congressional bill that would make AB 5 the standard under federal law, too.
While there’s still a lot of uncertainty about how the AB 5 drama will play out politically, one thing is clear: Gig economy companies will put up the fight of a lifetime to get out of the costly effort of converting their contractors into full-time employees.
And ride-hailing companies see an ally in California Governor Newsom, who signed AB 5 but has since been urging labor leaders and gig companies to come up with a compromise less contentious than the current application of AB 5. It’s still unclear whether they can reach a deal.
So while AB 5 may have passed, the showdown between ride-hailing giants and driver organizers is only in its second act.