Lawmakers in California have approved a bill that could pave the way for gig economy workers, such as Uber and Lyft drivers, to be reclassified as full- and part-time employees and not contract workers. If the bill becomes law, it will have broad implications for labor in America, said an employment law expert at Washington University in St. Louis.
“If gig workers like Uber and Lyft drivers are reclassified as employees, those companies will have to comply with existing labor and employment laws,” said Pauline Kim, the Daniel Noyes Kirby Professor of Law and nationally recognized expert on the law of the workplace.
“Practically speaking, that will mean they have to do things like pay payroll and unemployment insurance taxes and provide workers’ compensation insurance,” Kim said. “They will also have to comply with minimum wage and overtime laws. There are other California laws that might apply, such as requiring the companies to cover expenses for their cars, gas, etc.”
Soon after the California bill formally was approved Sept. 11, Uber officials announced that they planned to continue to consider their drivers as independent contractors.
Kim said the companies claim that treating drivers as employees will mean they can no longer have flexible work schedules, which is not necessarily true.
“The companies could still allow drivers to choose when they want to work, but during the periods they are working, Uber and Lyft will have to ensure they get enough rides to pay them at least a minimum wage,” she said. “If there are fewer passengers, they might have to pay them a wage in addition to whatever they get from completing rides in order to ensure they are earning at least the minimum.
“One of the things the gig worker model did was shift the risk to the drivers that they would not get enough riders during the times they worked. If they are classified as employees, the companies will bear more of that risk. If they are on the hook for minimum wages, they will have more of an interest in controlling the supply of labor, so will likely want to exercise more control over how many drivers are on the road and when.”
The effect of making the drivers employees will be to raise the costs of labor, Kim said.
“Uber and Lyft will likely try to raise fares, but lower fares was one of the advantages they had over taxis and car companies. You could argue that the fares they have been charging have been artificially low precisely because they were able to shift many costs to the drivers by structuring the relationship as an independent contractor one.”