Law and the Future of Gig Work in California: Problems and Potentials (Part 1)

Veena Dubal

Veena Dubal is a professor of law at the University of California, Hastings.

Sanjukta Paul

Sanjukta Paul’s current research and writing involves the intersection of antitrust law and labor policy, in particular how and why antitrust law has limited the coordination rights of working people. Her book project on this topic will be published as Solidarity in the Shadow of Antitrust by Cambridge University Press. She is generally interested in the intersections of work regulation and the law of business, and in how law constructs economic life. Her papers include “Uber as For-Profit Hiring Hall: A Price-Fixing Paradox and its Implications” (spring 2017), published in the Berkeley Journal of Employment & Labor Law, and “The Enduring Ambiguities of Antitrust Liability for Worker Collective Action” (spring 2016), which was recognized with the Jerry S. Cohen Memorial Fund’s award for the best antitrust scholarship of 2016 (category prize), presented by the American Antitrust Institute. She is also contributing a chapter on antitrust and workers to the forthcoming Reviving American Labor (C. Garden and R. Bales, eds., Cambridge University Press, forthcoming). Paul previously served as David J. Epstein Fellow in Public Interest Law & Policy at UCLA Law School. There she designed and taught the Workers Rights Litigation Clinic, which represented low-wage workers in wage theft claims, and in a complex class action alongside local non-profit organizations. Prior to this fellowship, Paul practiced as a public interest lawyer in Los Angeles for several years, focusing on employment and civil rights litigation, as well as some labor union matters. During this time she also worked on the campaign to reform the working conditions in the port trucking industry with the policy nonprofit Los Angeles Alliance for a New Economy. Paul clerked for the Honorable Alfred T. Goodwin of the Ninth Circuit Court of Appeals. She is a graduate of Yale Law School, where she was a Coker Fellow, and studied philosophy at the University of Pittsburgh, where she held a national Mellon Fellowship in Humanistic Studies and earned an M.A.

This is the first part of a two-part post on AB5.

Last week, a coalition of 75 professors from across the country sent a letter to California lawmakers in support of AB5.  AB5, which will soon be voted on in the California Senate, codifies the legal standard articulated in Dynamex v. Superior Court (2018) and extends it to all California employment laws.  In Dynamex, the Court created a presumption of employee status and set forth a simplified legal standard (“ABC” test) for an entity attempting to classify workers as independent contractors.

If AB5 passes and is signed into law, many “gig” workers will be entitled to state employment law protections—including minimum wage, overtime, unemployment insurance, and workers’ compensation.  In the letter of support for AB5, the drafters (full disclosure: we were among them) underscore the reality that currently, most app-based workers are “algorithmically controlled in the traditional ways that employees are controlled.”  The letter states that any carveout for gig workers is a category mistake for employment and labor law purposes.

While AB5 has received overwhelming support from gig workers, the California Governor, and even Democratic presidential candidates, some commentators have articulated concerns about its implications.  The two overarching arguments against extending employment protections in the so-called gig economy are (1) potential for loss of schedule flexibility, and (2) concern that regulations would result in platform dominance.  We take up the flexibility issue here and address the arguments around platform dominance in a coming post.

Part 1 of 2:  On Flexibility

The most resonant argument against the application of employment laws to gig work is that workers do not want to be employees because they desire flexibility in their work lives.  One unstated and erroneous assumption here is that employee status necessitates loss of this flexibility (it does not).  Another is that gig work provides adequate schedule flexibility (it does not).

Nevertheless, schedule flexibility (even in its current, restricted form) is a matter of importance for gig workers.  In my (Dubal) earlier work on a previous generation of gig workers in San Francisco, I used ethnography to show how taxi drivers embraced their long-term leases (which, in most cases, made them independent contractors) because of the flexibility these leases facilitated.  But absent wage protections, drivers stabilized their income by lobbying municipal regulators around fares and vehicle caps.  As a result of a 1996 court decision (discussed here), taxi workers (in theory) also had safety net benefits.  This was an imperfect path, but it provided San Francisco taxi drivers with some semblance of security for three decades.

App-based gig workers today, by comparison, have little control over how much money they generate, no unemployment insurance, and subpar workers’ compensation (if any). Wages are frequently and unilaterally changed by companies; wage calculation is opaque and unpredictable; time spent working is highly structured by algorithms; and in some cases, customer tips are counted toward base pay.  Without basic protections and collective bargaining rights, workers in California have no means (short of a full-fledged strike) to change this.  As a policy matter, this is unacceptable.

In a chapter of a soon-to-be published volume on gig work, edited by Deepa Das Acevedo, I (Dubal) show that in contrast to survey evidence suggesting that most gig drivers want to be independent contractors, my ethnographic research amongst Uber drivers reveals that most hold an ambivalent position towards both statuses.  While drivers universally want basic employment protections, they are afraid of what an exploitative company like Uber would make them do if they were employees (work shifts, wear uniforms, etc.).  I argue that a policy debate focused solely on words—independent contractor or employee—misses both the conceptual semantics at play and the structural dynamics of gig workers’ lives.

It’s not that Uber drivers don’t want to be employees; it’s that this question misses the point.  They want more protections than the law currently affords them.  In addition to basic protections, many workers need schedule flexibility to facilitate their transnational lives, family obligations, and/or chronic illnesses.  But with low, nonlinear pricing (which forces them to work long hours) and incentive-based pay (which forces them to work strategically, during high demand), the work lives of gig workers remain highly structured.

As Ben pointed out in a previous post, Uber and ilk do not have to, but may choose to respond to employee status by imposing even more overt control over worker schedules.  A move to shift-based model of work seems unlikely given that gig companies rely on an oversupply of workers who desire some schedule flexibility.  Afterall, further curbing flexibility would drive away fulltime workers who generate most of the revenue.

One way in which companies may respond is by restricting access to work during low demand (if only as a temporary threat to create support from drivers for a statewide proposition to undermine AB5).  Given the time drivers spend awaiting a gig (roughly 40% of time while logged onto the app), the companies do not want “downtime” to be calculated into workers’ hourly wages.  In response to the implementation of an hourly wage floor in NYC, for example, Lyft began preventing some NYC drivers from logging on during lulls in requests.  Of course, occasional inability to log on is not the same as a wholescale move to a shift-work model, but it has stirred anxiety among the California gig workforce who also have received in-app threats regarding flexibility.

Another response that gig companies have floated to address wage costs associated with employee status is to reduce their workforce.  This outcome might, counterintuitively, actually increase overall schedule flexibility by raising driver income and reducing the need to structure schedules through incentives.  A smaller workforce, in which supply of drivers better matches demand, would also reduce downtime.  Alongside other employee protections, this might solve the companies’ driver attrition problem (2/3 of drivers quit within 6 months). Workers could have absolute schedule flexibility and fewer competitors for fares. As a result, their wages would increase, and, alongside the security of a wage floor, this would incentivize full-time employment.  Consumers, in turn, would benefit from a professional workforce.

We cannot pretend to know how the gig companies will respond to AB5 and whether it will impact drivers’ already limited flexibility.  Nevertheless, AB5 could increase the flexibility of this workforce, instead of limiting it. Opponents of AB5 point out that existing binary legal categories need not be binding on current legislatures: logically, this point certainly also applies in a direction that is liberatory of workers. The state (legislature or CPUC) could proactively secure schedule flexibility by implementing regulations which state that gig companies cannot prescribe specific hours for work or impose restrictions on workers’ ability to log on. Even absent such state regulations, the income security and predictability created by employee status will necessarily increase the bargaining power of these workers, putting them in a much better position to negotiate an increase in overall schedule flexibility.  Not working 16-hour shifts (as many Uber/Lyft drivers currently do), workers could spend more time engaged in grassroots organizing, building collective power, and making demands for the kind of work that better reflect their needs, desires, and senses of fairness and dignity.

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