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California Seeks to End Gig Economy, Sues Uber and Lyft Under New State Law

California Seeks to End Gig Economy, Sues Uber and Lyft Under New State Law

Uber spokesman: “At a time when California’s economy is in crisis with four million people out of work, we need to make it easier, not harder, for people to quickly start earning.”

Califonia’s attorney general, along with city attorneys from San Diego, San Francisco, and other cities filed a lawsuit against Uber and Lyft for allegedly classifying “drivers as independent contractors in violation of a state law that makes them employees.”

Assembly Bill 5 (AB5), like any law, sounds like good intentions but has horrible consequences on the “gig” economy. It demands that private businesses classify “workers as employees instead of contractors if they control how workers perform tasks or if the work is a routine part of a company’s business.”

A company can get around the requirements if it passes the ABC test, which determines if a worker is a contractor or employee.

Uber and Lyft have countered any allegations against them because “their drivers have independence and decide when to work.” But the lawsuit insists the “companies exert enough control over drivers to make them employees:”

“Uber and Lyft are traditional employers of these misclassified employees. They hire and fire them. They control which drivers have access to which possible assignments,” the lawsuit says. “Uber and Lyft are transportation companies in the business of selling rides to customers, and their drivers are the employees who provide the rides they sell.”

California Attorney General Xavier Becerra defended his choice because the “innovation” behind Uber and Lyft “doesn’t require these companies to mistreat their workers.”

I guess Becerra thinks those who sign up as Uber and Lyft drivers do not know what they’re getting themselves into? I guess not:

The state, which seeks up to millions of dollars in civil penalties and to force the companies by court order to reclassify drivers and restore what it called unpaid wages, also said Uber and Lyft haven’t contributed state payroll taxes used to fund general health welfare programs. The lawsuit was filed with the city attorneys of San Francisco, where Uber and Lyft are based, and Los Angeles and San Diego.

A Lyft spokeswoman stated the company is “looking forward to working with the Attorney General and mayors across the state to bring all the benefits of California’s innovation economy to as many workers as possible, especially during this time when the creation of good jobs with access to affordable health care and other benefits is more important than ever.”

The Uber spokesman provided a harsher statement: “At a time when California’s economy is in crisis with four million people out of work, we need to make it easier, not harder, for people to quickly start earning.”


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healthguyfsu | May 6, 2020 at 5:07 pm

Forcing benefits on that system would likely be near ruinous uber and lyft by jacking up prices. The consumer of their services would, of course, foot the bill.

They might still survive, though, since cabs are so awful.

    Or a “black market” for taxi services develops.

      It’s very easy for Uber drivers to manipulate the app to cut Uber out of the fare completely if they so desire.

      Geologist in reply to Recovering Lutheran. | May 6, 2020 at 6:07 pm

      There already is a black-market for unlicensed cabs in Los Angeles. I know of some Korean taxi companies and I vaguely know of a Hispanic car service.

        Not surprising. But this move by the People’s Democratic Republic of California will accelerate the trend of unlicensed taxi services (pun semi-intended). Communist leaders always create black markets unintentionally with their stupid actions.

      How is it any business of government to interfere in a contract between employer and employee? No one is forced to work for these companies. And how can gov get away with sanctioning a legal activity after the fact? Uber has been around for years and now the state suddenly decides how to run their business for them. Isn’t there something ex post facto to prevent govt from doing this? They

        DaveGinOly in reply to JimWoo. | May 7, 2020 at 3:54 am

        The Constitution’s ban on ex post facto laws applies only to criminal law, not civil law. (Although there is some dispute about this.)
        However the Contract Clause provides that no state may pass a “Law impairing the Obligation of Contracts.” This may apply.

The longer they keep this crap up, the more there will be a developing underground economy. Barbers are already cutting hair in backyards and garages, and other industry will follow. And the really neat thing is these dirty bastards in government aren’t going to be collecting any taxes on it.

    I had friends who cut hair by coming over to your house. They made a lot more money than their salon-bound peers. And they made cash.

    Millennials will soon learn the joy of cash, and never agree to it being extinguished.

    amatuerwrangler in reply to CDR D. | May 6, 2020 at 7:25 pm

    Of course its about the taxes, the taxes not collected. Many of those who provide contract services bill the contracting company directly and get paid directly. It is up to the contractor to pay the taxes; there is no withholding. The state may have to wait for the money until the end of the quarter, or even the tax year. The contractor gets to deduct expenses (cost of doing business) before computing the tax owed. The contracting company will be able to deduct the amount paid to the contractor as a business expense. The state does not like any of those things. They are not interested in benefiting a working person; they want the money.

    I wish I could upvote your comment a thousand times. Dictatorships always create black markets and underground economies; otherwise the body count would be ever higher than it is.

    Unfortunately the poor citizens of the PDRC have no real chance of voting out their crackpot leaders. Illegal aliens voting, ballot harvesting (a form of voting fraud Third World tyrants could only dream of) , jungle primaries, a dumbed-down education system, a Pravda-esque media, and a toothless state GOPe have made California’s Democrat dictators cocky and belligerent. This will not end well.

I was in San Diego 2 years ago and All the Uber drivers had full time jobs but needed the money because California is too expensive to live anymore…

There will be another large exodus and then what will they do? All they will have is illegals, IT, Hollywood … good luck with that California

    Paul in reply to gonzotx. | May 6, 2020 at 6:52 pm

    What will they do? Like locusts, they’ll swarm into surrounding states and infest them with their bullshit progressive politics.

    MarkJ in reply to gonzotx. | May 6, 2020 at 8:17 pm

    Q: What’s the difference between 14th Century England and 21st Century California?

    A: There was more opportunity for upward mobility in 14th Century England.

2smartforlibs | May 6, 2020 at 5:32 pm

Just can’t let people make money without getting a cut. This is 100% about unions.

Close The Fed | May 6, 2020 at 6:18 pm

We don’t ever ask why Americans are having smaller families. This is a big part of it: the government makes everything harder, at every opportunity. Americans tolerate more government, more paperwork, more humiliation at the hands of government employees, than we ever acknowledge. The thrill of power enjoyed by government employees is the pleasure they dare not name.

Of course, we should look at another aspect as well: as long as there is a welfare state, companies can offload a great deal of expense onto the taxpayer. Get rid of the welfare state and people wouldn’t be able to afford what they accept now for pay.

Ridding ourselves of the welfare state would be totes Kewl. Be fascinating to see people finally wanting to get rid of illegal aliens and foreigners out of desperation for increased wages.

    We can still do it. Do what? Return to an America as founded with limited government, where the people are left alone to their own pursuits. But it will take much more citizen involvement.

    Take a look at the video cited below. Here’s some of its script,

    It wasn’t what government did that made America great; it was what government was prevented from doing that made the difference,

    What set America apart from all other lands was freedom – for the individual. Freedom to work, to produce, to succeed and, especially, to keep the fruits of one’s labor.

    America became great precisely because the stifling effects of too much government had been prevented.

    However freedom in America was not totally unrestrained. Americans overwhelming chose to limit their actions with moral codes such as the Ten Commandments. Personal morality and limited government is the combination that characterized America and made it the envy of the world.
    When our Founding Fathers decided they had enough of British oppression they broke away and declared independence. They stated as self-evident truth in the Declaration of Independence that men are endowed by their Creator with certain inalienable rights. In other words, God gave man his rights. And that among them are life, liberty and the pursuit of happiness. And in the very next sentence, the Founders defined the proper role of government when they stated that to secure these rights governments are instituted.

    This is the entire philosophical base of our nation. Here the government can not legitimately redistribute the wealth, assume power over the people’s lives, and dominate man’s existence with oppression taxation, regulation, and control.

    According to the Founders, government was to be a negative force which leaves people alone. Its sole function is to protect citizens from one another, and from foreign government, and especially from their own government itself. The Founders did not create a government to be a positive force, to do things for people, to take from some to give to others. They understood that when government starts do something for one citizen it has to take from another to do so, and in the process it gains control over both.

      fscarn in reply to pfg. | May 6, 2020 at 9:03 pm

      Over the last few years I’ve become quite impressed with the Birch Society. Its research material is quite helpful.

Close The Fed | May 6, 2020 at 6:24 pm

Also, thinking more about it, the functioning paradigm, that America must have an unAmerican class of dedicated laborers, shows how immigration has damaged the country.

We ought to MAKE OURSELVES self-sufficient, including, as we used to do, giving kids time off during harvests so they can go pick them.

Geeze, why do we insist on making our selves dysfunctional? Votes and Money pretty well sums it ALL up.

Big biz doesn’t want to pay what it would really cost, and pols want to buy votes by giving welfare and not making Americans do hard work. Gee, funny how they complement each other!!!

I did hard work. Others can do it too.

Santayana called to say “Prohibition didn’t work.”

The last thing – the VERY last thing – that california fascists want is for people to be fee economically.

Horrifying, isn’t it?

The IRS more or less did the same thing a couple decades ago. Companies that had contractors hired temp companies to hire their contractors, in response, and rented those then-employees from the temp companies.

The IRS was worried that contractors tended not to pay payroll taxes and this made it easier to collect.

vinnymeyer | May 6, 2020 at 8:33 pm

Ok. So if California has decided to enforce their vision of employment on workers in the gig economy, and they’re suing Lyft and Uber for the money they think they’re entitled to, then it begs the question WHY ARE THEY STILL THERE?

Geeze. Pack up the servers, and move the whole thing either out of California, or if that’s not far enough, off shore.

Kleptocrats gotta kleptocrat.

Everything you need to know about local government can be picked up from watching “The Sopranos.”

My son drives Uber…. derives Lyft…. drives hot shot delivery…. and by order private deliveries. He gets 3 to 5 1099s a year. Business deducts I for contractors. Trump tax cut effectively eliminating employees job related expenses. He would have to pay additional taxes based on this. It seems California would be different than feds?

    sidwhite in reply to sidwhite. | May 6, 2020 at 9:27 pm

    Uber and Lyft are the smaller portion of his work. Over half that income between Thanksgiving and first weeks of January.

Finally, somebody is standing up for the little guy. Far too many times I’ve seen Uber press gangs roaming the streets, looking for underpaid employees to club down and chain into automobiles so they can earn a mere pitance while the wealthy Uber leadership gloats over their massive piles of money. Cut these shackles free, AG! Unleash the imprisoned drivers so they too can enjoy the freedoms of the Peoples Republic of Southern California, living five to a bedroom and sharing one toilet.

These Dhimmi-crat apparatchiks are so vile and contemptible. They’d rather have citizens living on the government dole, as opposed to earning money as self-sufficient contractors. These Dhimmi-crats in California are so proud of themselves, for making it harder for workers to work jobs with flexible hours and commitments, and, making it harder for companies to have flexibility in their hiring practices. As the great Milton Friedman sagely observed, the real minimum wage is zero, which is what contractors are earning when companies unsurprisingly refuse to be coerced by heavy-handed government apparatchiks into hiring contractors as full-time employees.

Dhimmi-crat “kindness” kills, no question, every single time.

I live in California. The State will not rest until everyone is on welfare, in prison or on the Government payroll.