Politics

The question that continues to loom over Uber and Lyft — and vex lawyers

High-profile lawsuits and legislation have failed to answer a question that has loomed over ride-hailing giants Uber and Lyft even as more Californians have decided to drive for the companies: Just whom do the drivers work for?

Whether the drivers are company employees, independent contractors simply paid to share their cars or a new third type of worker has continued to vex lawyers and legislators, with the answer having profound implications for the workers and companies’ bottom lines.

Assemblywoman Lorena Gonzalez Fletcher (D-San Diego), who amid strong opposition last year dropped a bid to allow ride-hailing drivers and other workers in the so-called on-demand economy to organize, wants to keep focus on the issue. She hopes to author a bill that would reach the governor’s desk by the end of 2018.

“We have a responsibility to intervene,” Gonzalez Fletcher said.

San Jose San Francisco Los Angeles San Diego U.S. Average 145 142 136 109 48 Percent Increase in Ride-Hailing Drivers 2012-14 San Jose San Francisco Los Angeles San Diego U.S. Average 145.00 142.00 136.00 109.00 48.00 Uber and Lyft drivers boom in California Data: abcdefg hijkl mnop qrstu vwxyz 1234 56789 Liam Dillon / @latimesgraphics Source: The Brookings Institution

But Gonzalez Fletcher has yet to offer a bill directly addressing collective bargaining. She and others have faced frustrations in trying to design a system they feel would give workers more power to advocate for their pay and benefits while preserving their flexibility to work when they want.

Last year, Gonzalez Fletcher pulled her bill early in the legislative session after business and labor leaders bashed different parts of it. Business groups were opposed to the idea entirely. Some labor groups didn’t like that under her legislation, companies would have to negotiate with separate groups of as few as 10 independent contractors, arguing that companies could easily manipulate small groups.

“I think last year would have been a disaster,” said Rome Aloise, an international vice president for the Teamsters, who is leading an effort to organize ride-hailing drivers in California.

If Uber and Lyft drivers were employees, the companies would have to pay driver mileage and other expenses, which could increase their costs by more than 30%. But at the same time, the companies would have much greater control over hours and other work rules, a model that might not fit a business where multiple studies have shown the majority of drivers do the job part time for extra income. The same goes for other on-demand jobs, such as freelance writing and running errands for pay.

It’s difficult to know how many independent contractors are working in California, but it’s clear the number is growing, including a boom in ride-hailing drivers. State labor and economic development officials don’t track independent contractors, and a long-awaited federal report on the on-demand economy isn’t scheduled for release until June.

An October study from the McKinsey Global Institute, the research branch of the Washington, D.C.-based management consulting firm, estimated that up to 30% of the working-age population in the United States and Europe — 162 million people — engaged in some sort of independent work, and the number working for ride-hailing companies and other digital platforms was rising rapidly.

From 2012 to 2014, California had four of the country’s top five fastest-growing metropolitan areas for ride-hailing drivers, according to an October study by the Brookings Institution. The number of drivers more than doubled in San Jose, San Francisco, Los Angeles and San Diego during that time, the study found.

“This is not a boutique part of the economy anymore — certainly not in California,” said Mark Muro, a senior fellow and policy director at Brookings’ Metropolitan Policy Program and coauthor of the study. “I do think that the platform economy raises very challenging issues about quality of work, benefits, sustainability of work and the safety net. It is not surprising at all that Sacramento is trying to hash some of this out.”

Major lawsuits against Uber and Lyft arguing that drivers are employees have ended recently in financial settlements for drivers, but without determining whether they are employees or independent contractors. Last year, Uber agreed to support an informal, union-affiliated association that advocates for drivers in New York City but has no formal collective bargaining rights. The Seattle City Council last year passed an ordinance to allow ride-hailing drivers to unionize. Uber is fighting against a bid by the Teamsters union to do so, and the U.S. Chamber of Commerce and others have filed lawsuits challenging Seattle’s decision.

In California, the Teamsters held conversations over the past year with ride-hailing industry members, but those have stalled in recent months, Aloise said. He hoped to restart the discussions soon and declined to identify which companies were participating. A Lyft spokeswoman said the company wasn’t involved, and an Uber spokeswoman declined to comment.

In preparation for those discussions, Aloise said the Teamsters met with hundreds of ride-hailing drivers in California and learned the difficulties in trying to organize them. In one circumstance, Aloise said, the union met with 30 drivers to discuss various issues, and when he tried to follow up a couple of weeks later, many in the group had stopped driving for the companies. While all drivers want better pay, he said, those who work for a few hours each week have different interests than those who do it full time.

“The issues, in some cases, are almost as diverse as the drivers,” Aloise said. “It’s kind of like a mixture between the Tower of Babel and herding cats.”

Harry Campbell, who runs a blog and podcast aimed at ride-hailing drivers, said collective bargaining rarely comes up when he speaks with or surveys drivers. But they do have a series of complaints, particularly with Uber, about their treatment, he said. Drivers would like more autonomy to say no to rides without their access to the app being threatened, Campbell said.

“A lot of those part-time drivers, those that are working 10 to 20 hours a week, really want to be independent contractors,” Campbell said. “But they want to be treated as true independent contractors.”

Both companies have long insisted their drivers are properly designated as independent contractors and oppose collective bargaining efforts.

“Forcing old models onto this new workforce would only serve to limit the freedom and flexibility that drivers love about Uber,” company spokeswoman Eva Behrend said in a statement.

“Our drivers are independent contractors, and they have made it clear what they value the most about driving with Lyft is the flexibility to drive when, where and for however long they choose,” Lyft spokeswoman Chelsea Harrison said in a statement.

Gonzalez Fletcher has introduced Assembly Bill 1099 — a number evoking federal tax paperwork for independent contractors —as a step toward addressing the matter.

But right now, her bill only requires all companies that accept credit cards and other electronic payments also accept tips that way. That provision is targeted at Uber, which, unlike Lyft, doesn’t have an option to tip drivers in its credit card-based app.

She said she’s open to amending that bill or introducing another to deal with collective bargaining — one that she hopes could govern all on-demand workers, not just ride-hailing drivers.

“One way or another we’ve got to get to allowing that if they do this kind of work, they have to have some way to have some voice on the job,” Gonzalez Fletcher said.

liam.dillon@latimes.com

@dillonliam

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