Will California Legislate Fairness for Gig Workers?

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Published September 9th, 2019 - 09.09.1923


The battle for the gig economy’s future is underway in California. The fight is over a proposed bill – AB5 – that would classify many gig workers, including Uber and Lyft drivers, as employees for purposes of California employment law. Should AB5 be enacted, gig workers would win important protections like minimum wage, overtime pay, workers comp, and unemployment insurance – protections they now lack. These are critical rights. And they are rights that Uber and Lyft drivers deserve because those drivers – like most gig workers – are appropriately classified as employees.

California’s size, and its symbolic importance as the center of the gig economy, means that what happens in the state will have ramifications across the country. The importance of AB5 to the future of the gig economy nationally explains why the bill has garnered intense national attention: presidential candidates Julián Castro, Kamala Harris, Bernie Sanders and Elizabeth Warren have all weighed in to support the bill.

So AB5 is significant. But it is not perfect. The problem is that the bill fails to offer gig workers one of the most important employment rights of all: the right to form a union. The right to unionize is critical for gig workers for two basic reasons. One, as important as things like minimum wage and overtime pay are, they are minimum protections that fall far short of ensuring that workers earn what they need. Only a union and a collective bargaining agreement can enable workers to demand and secure anything beyond these minimum standards. Two, a huge body of economic research confirms that even minimum protections like overtime and workplace safety only get adequately enforced when there’s a union on the scene. Without a union, there is too great a risk that employment laws give workers paper rights but not real ones.

In the national debate over the future of the gig economy, then, AB5 should be understood as a positive, but fundamentally inadequate step. One way California could ensure that gig workers have both minimum standards protections and union rights is to enact AB5 along with a companion bill that granted unionization rights to these workers. We believe that a state, including California, would have the legal authority to enact this kind of companion legislation. It’s true that, as a general rule, states do not have authority to extend union rights to private sector workers because only the federal government has authority to do that. But, in what amounts to an ironic legal twist, the Trump administration’s opinion that gig workers are not covered by federal union law gives states the ability to grant unionization rights to these workers. A progressive state like California, moreover, could devise a far better set of union rights than what the outdated federal law provides. California could, for example, come up with rules about organizing and bargaining that makes powerful unionization a realistic possibility for the dispersed and fluid workforces of the gig economy.

While companion legislation of this kind is legally permissible, it also may be possible to achieve the same ends through a negotiated settlement. According to press reports, the Transportation Network Companies (i.e., Uber and Lyft), the Governor’s office and representatives of organized labor have been discussing such a deal. From the reporting, it appears that this deal would involve exempting TNCs from the full reach of AB5. That exemption is hugely significant, and rightly engenders deep skepticism among progressives and labor activists. But, in exchange for the AB5 exemption, TNC workers would get important basic protections – including a “net earnings guarantee,” injured worker insurance, paid sick and family leave – plus the right to form a union and collectively bargain. Moreover, the deal contemplates negotiations at the level of the “sector” rather than between unions and individual TNCs. This kind of sectoral bargaining can be far more powerful and likely to result in tangible and lasting gains for workers than is traditional firm-by-firm bargaining.

In fact, a negotiated deal might have some advantages over legislation enacted in the face of the firms’ opposition. For example, if a deal can be reached, it could ensure that the companies remain neutral on the union question and not fight drivers’ efforts to unionize. Such neutrality can be critical in organizing campaigns, and might be especially important given the size of the TNC workforce and the TNCs’ capacity to fight unionization should they decide to do so. A neutrality guarantee coupled with procedures to ensure true worker choice is instrumental to a fair unionization process. Unfortunately, legislation likely could not mandate neutrality, particularly given the current state of First Amendment law.

Nonetheless, it is impossible at this point to reach a bottom-line assessment of the deal being negotiated because we do not know many of the specifics. For example, on the minimum standards side, we would need to know whether the wage guarantee would cover the time drivers spend waiting for rides. Whether and how it would it cover drivers’ expenses. Whether drivers would be entitled to overtime. And whether they would have access to unemployment insurance and protections against racial and gender discrimination. On the unionization side, we would need to know how workers would decide which union (or unions) they want to represent them, and how we would ensure that the firms had no role in influencing that choice. Whether, if unionization did not occur, the opt-out from AB5 would be rescinded. And what would happen if, following unionization, the parties could not conclude a collective bargaining agreement. These are not minor details. They are fundamental to the question of whether any such deal should be embraced.

Whatever the answers to these questions might have been, the prospects for such a deal seem to be on life support.  Press reports suggest that negotiations have broken down and the legislative session will soon close. Even more troubling, gig companies are now preparing to pour vast sums of money into a ballot referendum that would allow them to draft their own rules without negotiating with drivers, unions, or the Governor’s office.

This would be an unacceptable outcome. In California, and across the country, hundreds of thousands of people are being forced to join the gig economy simply to survive in our low-wage labor market.  Addressing the exploitation of gig workers starts with bringing those workers in from the standards-free zone of misclassification. But it also demands that workers be given access to a unionization process that would deliver robust representation and worker power. California can and ought to be a state where gig workers enjoy all these rights, whether it reaches that outcome through negotiations around AB5 or through enactment of companion legislation that does not involve such a negotiated settlement.

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