Uber to California: Drivers won't be treated as employees, despite legislative action
SAN FRANCISCO — In a sign of the potential confusion and chaos set in motion by a landmark bill that the California Legislature passed Wednesday to effectively require companies to reclassify their contract workers as employees, Uber said it would not treat its drivers in the state as employees.
The measure requires companies to treat workers as employees — and provide them with the protections and benefits that come with the designation — if they exert control over how workers perform their tasks or if the work is part of an employer’s regular business. Gov. Gavin Newsom has endorsed the bill and is expected to sign it.
Tony West, Uber’s chief legal officer, said Wednesday that the company was confident that its drivers will be able to legally maintain their independent status when the measure goes into effect Jan. 1.
“Several previous rulings have found that drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces,” West said. He added that the company was “no stranger to legal battles.”
Uber’s early reaction is just one indication of the scrambling by employers across the state as the bill becomes a reality. Unlike contractors, employees are covered by minimum-wage and overtime laws. Businesses must also contribute to unemployment insurance and workers’ compensation funds on their employees’ behalf.
California has at least 1 million workers who work as contractors and are likely to be affected by the measure, including newspaper delivery people, nail salon workers, janitors and construction workers.
For months, lawmakers have jockeyed to exempt a variety of job categories, including doctors, insurance agents and real estate agents.
Carrying out the mandate will likely be anything but orderly. Companies in dozens of industries must decide whether or not to comply preemptively or risk being sued by workers and state officials. Some workers may find that their schedules and job descriptions radically change, while others may be out of a job altogether if their employers conclude that paying them a minimum wage and benefits doesn’t make economic sense.
And California may be only the beginning, as lawmakers in other states, including New York, move to embrace such policies. Legislators in Oregon and Washington state said they believed that California’s approval gave new momentum to similar bills that they had drafted.
“It makes everyone take notice,” said state Sen. Karen Keiser of Washington, who expects her Legislature to take up the measure next year. “It’s not just a bright idea from left field. It gives it a seriousness and weight that is always helpful when you’re trying to pass a new law.”
Under the bill, a company must consider a three-prong test when classifying a worker. That includes weighing how much the company directs the worker’s tasks and how much of the work is part of the company’s main business.
Historically, if workers thought they had been misclassified as a contractor, it was up to them to fight the classification in court. But the bill gives California cities leverage to enforce the law by suing companies that don’t comply.
San Francisco’s city attorney, Dennis Herrera, has indicated that he may take action.
“Ensuring workers are treated fairly is one of the trademarks of this office,” he said in a statement. “We have a track record of taking on such cases, whether it’s making sure workers receive proper health care or are paid what they’ve earned.”