Uber and Lyft facing driver shortages

After the fallout from last year’s standoff with state authorities over classification of their drivers, Uber and Lyft are in the news again, this time offering more incentives to entice those drivers back to work. As people are venturing out into daily life once more, rideshare demand is exceeding availability for both platforms as many drivers are reluctant to return.

Along with reticence about work safety issues and a lack of readiness to get off the unemployment rolls, many drivers expressed bitterness over the passage, by a large margin, of Proposition 22 last Fall. The new law exempts these companies from having to classify their drivers as employees, but at the same time requires them to pay basic benefits such as a minimum hourly wage.

For some, that was the last straw, while others are waiting for better offers from the companies, even if wages will inevitably go down once things are up and running again.

The uproar over Proposition 22

When California’s Labor Commissioner accused Uber and Lyft of committing wage theft earlier in 2020 when they misclassified their drivers as independent contractors, both companies threatened to leave the state. The passage of Proposition 22, opposed by labor groups, satisfied the demands of the rideshare companies but set up a challenge to existing state law.

California’s employee classifications

Assembly Bill 5 (AB5), passed in 2019, codified a California Supreme Court case that created a presumption that any worker can be classified as an employee, with the burden of proving otherwise falling on the employer. Under the classification of employee, a worker will enjoy basic protections under state law such as guaranteed minimum wage, unemployment and sick leave, as well as worker’s compensation insurance.

In order to prove that the worker is not an employee but rather an independent contractor, the employer must show that:

  • the worker is independent of the direction or control of the hiring entity while performing the work
  • the worker performs the work outside of the business’s operations or schedule
  • the worker has an independent trade, business or occupation

Understanding the law and what protections there are for workers in California is essential, especially if they are fighting wage theft, misclassification or wrongful termination. Employers are also sometimes unaware of recent changes in worker classification, and so running afoul of the law can be a costly mistake. If you are in a wage dispute, it can help to have a strong legal team serving the San Diego to uphold your employment rights.