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What Happens to CA Uber and Lyft Drivers Once AB 5 Passes?

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What happens to Uber and Lyft drivers once AB 5 passes?

SACRAMENTO (CalMatters) –California is poised to pass a sweeping labor bill that would turn drivers into employees. But gig companies are concerned about the implications, and demand lawmakers forge a new path.

Over Labor Day, Gov. Gavin Newsom declared his support for reclassifying an estimated 2 million California workers as employees instead of independent contractors. Powerful unions view AB 5 as the year’s signature labor achievement, and the bill is expected to pass the state Senate next week – its last stop before heading to the governor’s desk.


But while Democratic presidential candidates have seized upon labor standards of gig workers as a campaign issue, many questions remain about AB 5’s implications, particularly for Uber and Lyft drivers who number in the hundreds of thousands. Will they become employees when AB 5 becomes law? Will their pay go up? Will they lose flexibility?

Much of this remains in flux. Uber and Lyft say today’s on-demand economy calls for a new, first-in the nation framework, and they want California to forge it. Last week major gig employers seeded $90 million for a ballot measure unless lawmakers find a way to protect their business model. At the same time, the companies acknowledged their drivers deserve better pay, more benefits and greater representation by offering some kind of bargaining with the rideshare industry.

UBER AND LYFT DRIVERS NUMBER IN THE HUNDREDS OF THOUSANDS. WILL THEY BECOME EMPLOYEES WHEN AB 5 BECOMES LAW? WILL THEIR PAY GO UP? WILL THEY LOSE FLEXIBILITY?

Democrats and labor leaders are working their way through this issue, which means even after AB 5 passes, negotiations will continue. On Wednesday, Politico reported California Labor Federation Chief Officer Art Pulaski has been sharing a road map for how unions might cut through legal uncertainty in order to unionize gig workers. Newsom also says he’d like to craft something new, which would burnish his reputation as a friend to both tech and labor.

But with days left in the current legislative session, political rhetoric continues to build. Here is what we know (and don’t know) so far about this contentious labor dispute:

Opponents of AB 5 rally for the status quo, in which Lyft and Uber drivers would remain independent, rather than employees of the rideshare titans, on July 9, 2019. Photo for CalMatters by Anne Wernikoff

What happens to Uber and Lyft drivers if they are categorized as employees?

Depends on whom you ask. The companies say it would fundamentally change the rideshare industry’s hiring practices, forcing them to move to “on demand employment,” which has never been done.

It would likely mean the companies would take on fewer drivers, and assign shifts much as a restaurant or retailer might schedule workers. The companies say that drivers would lose a primary attraction of the platform — flexibility.

“We would likely have to exert more control over drivers, telling them where to work, how to work, and who they can work for. Uber would likely hire far fewer drivers than we currently support, and we’d likely have to require a minimum number of hours per week. Scheduling and rigid shifts would become the norm, and Uber would likely prevent drivers from working for other rideshare companies,” Uber wrote recently.

The company says it would block drivers from signing on when the number of drivers outstrips demand, for example in a quiet neighborhood during off-peak hours. Uber and Lyft warn that riders could see higher costs and longer wait times. Riders in transit deserts, they warn, could lose service entirely.

THE COMPANIES SAY AB 5 WOULD FUNDAMENTALLY CHANGE THE RIDESHARE INDUSTRY’S HIRING PRACTICES. THAT’S A ‘CORPORATE SCARE TACTIC’, LABOR SAYS.

Steve Smith, a spokesman for the California Labor Federation, called these scenarios a “corporate scare tactic” and said nothing prevents companies from maintaining flexibility.

In shifting to employee status, companies would have to offer basic worker protections such as guaranteed minimum wage, overtime pay, contributions to Social Security and Medicare, unemployment and disability insurance as well as workers’ compensation, sick leave and family leave. Workers could also get reimbursed for mileage and maintenance of their vehicles, which doesn’t happen now. 

Most likely there would be tradeoffs, writes Harry Campbell, a Long Beach-based driver who authors The Rideshare Guy blog and podcast. Drivers, he predicts, will lose some flexibility and be prevented from driving more than 40 hours a week to avoid overtime, or even 30 hours a week to avoid healthcare benefits. There would be less incentive for Uber and Lyft to offer surge or dynamic pricing, which is now used as a financial incentive to get drivers where demand is high.

On the flip side, drivers would get at least the minimum wage plus mileage reimbursement. Another perk would be getting paid whether or not there’s a passenger in the vehicle, which doesn’t happen now.

“It doesn’t take a rocket scientist to realize that if drivers were guaranteed a minimum wage, you wouldn’t be able to just flip the app on anytime from 10 a.m. to 3 p.m.,” writes Campbell, “because there would be way too many drivers and not enough rides.”

Assemblymember Lorena Gonzalez, a former labor organizer, speaks at a rally in support of AB 5, August 28, 2019. Photo by Anne Wernikoff for CalMatters

Remind me, what is the Dynamex decision?

Gig companies have been in a legal gray zone since the California Supreme Court issued the so-called Dynamex decision last year making it harder to classify workers as independent contractors. The ruling established a three-part test, or ABC test, for certifying contractors, with the highest hurdle being that the work performed must be outside the company’s core business.

AB 5 by Assemblywoman Lorena Gonzalez, a former labor organizer and a Democrat from San Diego, would codify the court’s decision into state law. From labor’s perspective, this forces gig companies to start paying their fair share of payroll taxes and contribute to disability and unemployment insurance funds for workers. If they don’t, AB 5 would allow state agencies, such as the Labor Commissioner, Franchise Tax Board and Employment Development Department to enforce misclassification. 

Workers would also still be able to file their own lawsuits.

How soon might the shift happen?

Although AB 5 would take effect Jan. 1, 2020, don’t expect any immediate changes. Since the inception of Uber and Lyft, rideshare companies have spent millions in litigation and on settlements to try to keep drivers from being classified as employees. This fight is no different.

“If AB 5 passes, it’ll simply be a qualification of existing law,” Uber CEO Dara Khosrowshahi  saidwhen asked during an earnings call about California’s effort to reclassify drivers. “It doesn’t immediately transform drivers into employees.”

Expect both legal challenges and political haranguing to continue.

Is there a third way?

This is something to watch for. In the final week of session, Uber and Lyft are lobbying hard to get some kind of carveout and they are pitching a new construct as a win-win-win for the drivers, the gig employers and the state.

Letting gig workers remain independent contractors would lift the costly legal fights Uber and Lyft have been fighting for years over classification and let them work around AB 5. Allowing drivers the right to collective bargaining would, overnight, let unions add more than 200,000 members. And by crafting a third way, California would get to be a trailblazer in fighting for workers in the new economy.

A compromise on the treatment of independent contractors could burnish Gov. Gavin Newsom’s reputation as a friend to both tech and labor. Photo by Hector Amezcua for CalMatters

How would gig workers unionize if they remain freelancers?

Good question. Right now there’s a conflict between the state’s Dynamex decision, which presumably would shift drivers from freelancer to employee, and the federal government’s treatment of gig workers as contractors, which makes them ineligible for the right to form a union.

In a confusing twist, Newsom says California could take advantage of this inconsistency. 

“Only when the National Labor Relations Act does not cover workers may states act to provide the right to organize a union, allowing workers to bargain for better pay, benefits and working conditions,” he wrote.

Details are scarce but this follows the same logic Pulaski outlined, which calls for gig economy workers to be placed in a new category where they can remain freelancers but access collective bargaining powers.

Would everyone go for this?

Unclear. Labor unions have been split over whether gig companies should even get a carveout. On one side, the Service Employees International Union and Teamsters have been willing to negotiatean alternative in addition to AB 5, an acknowledgement that unions have to evolve with the changing economy. 

But the State Building and Construction Trades Council of California is refusing any concessions. Its leader, Robbie Hunter, was removed from Newsom’s future of work commission over the disagreement. 

It’s easy to see why: The building trades is an umbrella organization that represents electricians, roofers, painters and a host of other skilled construction workers who currently enjoy prevailing wage, training and job protections. If companies such as Handy were allowed a carveout, it could threaten to turn those careers into gigs. 

What about everyone else impacted by AB 5?

With so much talk about Uber and Lyft, it’s worth remembering that AB 5 impacts more than gig workers. The bill would sweep up some workers across industries, from truck drivers and nail technicians to musicians and strippers. 

Gonzalez has agreed to leave many workers out. Notably, she has granted exemptions to doctors, insurance agents, real estate agents, hair stylists and barbers who hold booth rental permits, dentists, architects, engineers and accountants.

She also has been making case-by-case concessions for travel agents, graphic designers, grant writers and marketing professionals. Newspaper publishers also have sought an industry exemption since many use freelance writers, photographers, editors and newspaper carriers. The latest version of AB 5 includes an exemption for freelancers as long as they contribute no more than 35 submissions a year. 

This article is produced as part of WeHo Daily’s partnership with CalMatters, a nonpartisan, nonprofit journalism venture committed to explaining how California’s state Capitol works and why it matters.

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California

Low Income Buyers Don’t Have Credit Cards – and Some Stores Don’t Accept Cash

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by Jackie Botts for CalMatters

CALIFORNIA — One state lawmaker says cash-free stores are discriminating against low-income customers, who often don’t have bank accounts.

Last May, Burger Patch first opened its doors in midtown Sacramento with a sign that said, “No Cash Accepted.” The owners of the organic and vegan burger joint were worried that a cash register might invite theft.

But customers kept showing up with only cash. Sometimes the cashiers would accept it, working around the digital system; other times, they’d simply give the customer a free meal. About a month in, Burger Patch changed course, deciding to install a cash register after all.

“We want to be able to have everyone come and eat here no matter what,” said Zia Simmons, who has worked at the restaurant since it opened.

“We want to be able to have everyone come and eat here no matter what,” said Zia Simmons, who has worked at the restaurant since it opened. “We don’t want to ever have to be like, well if you don’t have a card, you can’t eat here.”

A small, but growing number of businesses are no longer accepting cash. Owners say that accepting only credit cards, debit cards or digital wallets like Apple Pay is more efficient and lowers the risk of being robbed. Electronic forms of payments are gaining popularity with consumers.

But the cash-free trend has raised concerns that such shops exclude customers who rely exclusively on cash. Sen. Jerry Hill, a Democrat from San Mateo, says this amounts to discrimination against people without credit cards or bank accounts, who tend to be low-income. 

“I don’t think it’s intentionally discrimination. But that’s in fact what they’re doing,” Hill said. Cashless stores “may be the thing of the future, (but) it’s not there yet.”

That’s why Hill introduced a bill last week to require that all brick-and-mortar businesses in California accept cash. 
If passed, California would become the third state, after Massachusetts and New Jersey, to ban cashless businesses before they become widespread. San Francisco, Philadelphia and New York City passed similar ordinances in the past year, and Washington, D.C., is currently considering a ban.

A customer pays with a credit card at Burger Patch, a vegan burger joint in Sacramento. Photo by Jackie Botts for CalMatters

California residents with limited resources are far more likely to use cash. While 7.4% of California households do not have banks, the rate among households earning less than $15,000 per year is 27.3%, according to a 2017 survey by the Federal Deposit Insurance Corporation.

People of color, immigrants and disabled people are also more likely to be excluded by a cashless economy. In California, 20.5% of black households and 14.5% of Hispanic households do not use banks, according to the survey data. The rate is 24.8% among households that speak only Spanish at home and 20.7% among adults with disabilities. Single mothers lack access to bank accounts at a rate more than twice that of single fathers.

“When retailers don’t accept cash, they’re effectively locking out workers in low-wage jobs, communities of color and our homeless neighbors,” Andrea Zinder, president of United Food and Commercial Workers Western States Council, which has endorsed the bill, said in a statement. 

People between the ages of 25 and 44 pay with cash less often than people who are older or younger — about one-fifth of the time, compared with one-third, according to a 2019 study by the Federal Reserve Bank of San Francisco.

Under the proposed law, cashless transactions would be legal, but if a business turns away a customer who only has cash, it could face a civil penalty between $25 and $500. Online retailers would be excluded, as would car rental businesses.

No groups have filed opposition against the bill yet, but Hill expects that retailers may put up a fight. Around 10% of the nearly 100,000 businesses that use Square, a financial check-out service, are cashless, according to a recent national study from the company.

California Retailers Association has not yet taken a position on the bill, said President and CEO Rachel Michelin. An uptick in retail theft has spurred some smaller retailers to turn towards electronic payments to avoid keeping cash behind the counter. She said the bill might be “premature” given that she hasn’t observed a widespread trend in stores going cashless, other than in more techy areas like Silicon Valley.

Sen. Jerry Hill speaks in support of his bill SB 38, which would support volunteer firefighters if passed
Sen. Jerry Hill speaks in the capitol. Photo by Anne Wernikoff for CalMatters

Hill said the issue came on his radar when he walked into a restaurant in San Mateo last year.

“I saw there’s a sign there that said ‘we don’t accept cash.’ That kind of shocked me and surprised me,” Hill said. “That seemed almost like they were discriminating against those who did not have the ability to pay an electronic transaction, and for me that raised a flag.” 

The store was Sweetgreen, a build-your-own salad eatery with a sleek tech aesthetic, where a typical bowl costs upwards of $10. The chain phased out cash transactions in 2017 but reversed course last year.

“Going cashless… had the unintended consequence of excluding those who prefer to pay or can only pay with cash,” the company explained in a blog post last April. “To accomplish our mission, everyone in the community needs to have access to real food.”

Amazon’s cashier-less automated convenience store, called Amazon Go, also decided to phase in the ability to take cash after facing backlash.

To Hill, that’s evidence that companies can transition back “without great difficulty.” 

“I don’t know if (this bill) is as big of a deal for (retailers) as those who are now discriminated against because they cannot pay with cash,” Hill said.

Jackie Botts is a reporter at CalMatters. This article is part of The California Divide, a collaboration among newsrooms examining income inequity and economic survival in California.

This article is produced as part of WeHo Daily’s partnership with CalMatters, a nonpartisan, nonprofit journalism venture committed to explaining how California’s state Capitol works and why it matters.

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California

Equality California, Silver State Equality Endorse Mayor Pete Buttigieg

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Photo from peteforamerica.com

LOS ANGELES — Equality California, the nation’s largest statewide LGBTQ civil rights organization, and its Nevada-based affiliate Silver State Equality has announced their endorsement of Mayor Pete Buttigieg for President of the United States.

“The decision was reached unanimously by the groups’ joint presidential endorsement committee following a lengthy process that included a detailed questionnaire, thorough evaluation of the candidates’ viability and policy positions, staff engagement and interviews with the candidates” they said.

For the first time, California’s primary will be held on Super Tuesday in March, and California voters will begin casting mail-in ballots on Monday, February 3, the same day as the Iowa Caucus.

The 2020 Nevada Caucus will be held on Saturday, February 22.

Equality California and Silver State Equality released the following statement from Executive Director Rick Zbur:

“In our twenty-one-year history, we have endorsed hundreds of openly LGBTQ candidates, but never for president of the United States. That changes today.

“From his comprehensive plan to end the HIV epidemic by 2030 to his commitment to make our schools safe and supportive for LGBTQ students to his specific funding and policy priorities to protect and empower the transgender community — especially transgender women of color, who face an epidemic of violence and persecution — Mayor Pete Buttigieg has the boldest, most comprehensive agenda to achieve full, lived equality for all LGBTQ people of any presidential candidate in the nation’s history.

“This will be the most important election in our lifetimes — and the stakes couldn’t be higher. Donald Trump and Mike Pence have spent every day of the last three years attacking LGBTQ people and the diverse communities to which we belong: immigrant communities, communities of color, the transgender community, women and religious minorities. Mayor Pete is the best candidate to take on Donald Trump, win back the White House and help lead the fight to create a world that is healthy, just and fully equal for all LGBTQ people.

“While we did not endorse Mayor Pete simply because he’s gay, the historic nature of his candidacy has already had a transformational impact on the LGBTQ community. Electing the first openly LGBTQ president will send a message to millions of LGBTQ youth across the country that no dreams are too big and no leadership position is too high.

“The challenges we face are great. But with the power of hope and a bold, progressive vision for the future, there is nothing we cannot achieve. We’re ready to roll up our sleeves and get to work.”

In particular, Equality California and Silver State Equality were impressed by Mayor Buttigieg’s comprehensive plan to end the HIV epidemic by 2030, his understanding that making schools safe and supportive requires bold investments in teacher training and mentorship programs for LGBTQ students, his specific policy and funding priorities to protect and empower the transgender community, his plan to transform the criminal legal system into one that truly promotes justice and instead of one that furthers racial injustice and his proposals for fixing our broken immigration system by protecting refugees and asylum seekers and providing millions of LGBTQ undocumented people, their friends and family with a pathway to citizenship.

Mayor Pete Buttigieg released the following statement in reaction to Equality California and Silver State Equality’s endorsement:

“I’m honored to receive the endorsements of Equality California and Silver State Equality, two organizations that have been unrelenting in their fight for LGBTQ+ people and our push for full equality. My campaign is based around a shared future of belonging for all Americans, no matter their sexual orientation or gender identity. President Trump’s attacks on the LGBTQ+ community, especially our trans members, have shown us that the fight for equal rights did not end with marriage equality. I will be the President to continue that fight for equality for all Americans.”

Every top tier 2020 presidential candidate sought Equality California and Silver State Equality’s endorsement — a testament to the LGBTQ community’s role as a key voting bloc in California and Nevada, both important early states, and across the country. The Trump-Pence Administration is an existential threat to the LGBTQ community and the diverse communities to which LGBTQ people belong, and Equality California and Silver State Equality’s top priority in 2020 will be defeating Donald Trump and Mike Pence and putting a pro-equality president back in the White House. Both organizations have committed to supporting the Democratic nominee in the 2020 general election.

Although Equality California and Silver State Equality determined that Mayor Pete presented the boldest, most comprehensive plan for full, lived LGBTQ equality and is the best candidate to take on Donald Trump and win, the organizations were also impressed by Senator Elizabeth Warren and Tom Steyer, who both have extremely strong, compelling pro-equality policy agendas and participated in robust interviews with the joint presidential endorsement committee. Vice President Joe Biden, Senator Bernie Sanders, Mayor Michael Bloomberg and Andrew Yang also submitted questionnaires outlining their strong support for LGBTQ civil rights and social justice.

Prior to dropping out of the race, Senator Kamala Harris participated in Equality California and Silver State Equality’s endorsement process, submitted an extremely strong, compelling questionnaire and participated in events with Equality California. After two decades of working with her, Equality California has immense respect and admiration for Senator Harris, and LGBTQ Californians are lucky to have her fighting for civil rights and social justice in the U.S. Senate.

2020 will be one of the most consequential election years for LGBTQ people in modern American history, and Equality California and Silver State Equality plan to run substantial get out the vote efforts in elections up and down the ballot. In 2018, Equality California ran a robust statewide get-out-the-vote campaign to educate and mobilize pro-equality voters in California’s primary and general elections, helping to win crucial swing districts and flip control of the U.S. House of Representatives.

For a full list of Equality California’s 2020 endorsements to date, visit eqca.org/elections.

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California

Heavy Winds Cause Power Outages in Hollywood Hills

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HOLLYWOOD — Heavy winds triggered a series of power outages across Los Angeles for DWP customers Monday morning.

Thousands of Los Angeles Department of Water and Power customers were left without power Monday morning when heavy wind gusts triggered a series of 15 power outages.

In all, more than 6,800 Los Angeles Department of Water and Power customers were affected in across the San Fernando Valley including the Valley Village and Mission Hills areas, and in the Hollywood, the Hollywood Hills, Mid- Wilshire and Pacific Palisades.

High Wind Warnings were in effect through noon in the Santa Clarita, Antelope and San Fernando valleys.

The California Highway Patrol issued a SigAlert at 1:56 a.m. for lanes 4 and 5 of the westbound Ronald Reagan (118) Freeway near Reseda Boulevard in Porter Ranch after tree branches fell into lanes and a car was rendered unmovable after hitting them.

There were 11 incidents reported to the LADWP in the L.A. Metro area involving 6,200 customers and another four outages in the San Fernando Valley affecting 660 customers, spokeswoman Deborah Hong said.

That includes customers in Hollywood, the Hollywood Hills, Mid- Wilshire, Pacific Palisades, Valley Village and Mission Hills, according to the DWP’s Twitter account.

Repair crews were out making repairs since early in the morning, Hong says.

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