Uber and Lyft have been warning drivers about the end of flexible schedules, and passengers about more expensive rides that take longer to arrive, all thanks to a California bill that passed this week. 

But drivers and other gig workers are celebrating what could be a pathway to fair pay, benefits, and other employee rights, which some claim will come at only a slight cost to riders.

After the bill, called AB5, makes its way to the governor’s desk, it should go into effect on Jan. 1, 2020. It would make companies reclassify many independent contractors as employees, something Uber and Lyft have opposed. 

While this would directly affect drivers and other gig economy workers, like the 200,000 in California working for Uber, the people who use the apps could also see changes. 

The New York Times cited “industry officials” who say costs for companies like Uber and Lyft could rise by 20 to 30 percent because of AB5. Other industry experts like Michael Droke, a partner at Dorsey & Whitney in California, a law firm that has represented big companies like 3M and Wells Fargo in labor disputes, also sees costs going up for companies and prices going up for riders. 

“Many industries rely on independent contractors to deliver products and services, from food delivery to software coding and design. Those workers will be converted to employees, significantly increasing the cost of the products and services,” Droke said. 

Yaël Ossowski, deputy director of the Consumer Choice Center, which supports deregulation, said the law could force people to “seek out alternatives.” Instead of ordering a cheap ride, he thinks people will be forced to do things like carpool, hail a cab, or find a nearby bus.

LINK: https://mashable.com/article/ab5-lyft-uber-driver-rider-changes/

California’s effective outlawing of contractors will make consumers worse off

Sacramento, CA – On Tuesday, the California State Senate voted in favor of AB 5, requiring all companies using contract workers in the state to treat them as employees. Gov. Gavin Newsom is expected to sign the bill.

Yaël Ossowski, Deputy Director of the Consumer Choice Center, responded to the law’s passage:

“The proponents of this bill are celebrating the fact that they’re all but shutting down the prospects for the entire sharing economy and thousands of other industries in California,” said Ossowski. “The plain fact is this will hurt more people than it purports to help, depriving consumers of the innovations that have made their lives better and more prosperous.

“That includes home deliveries, home healthcare, ride-share, handyman apps, antique selling, and thousands more businesses and applications that millions of contractors and even more consumers have used,” said Ossowski.

“State Sen. Maria Elena Durazo said this proves lawmakers are “determining the future of the California economy.” She’s right. And they’re doing it by stamping out innovation. It will ultimately be California’s sharing economy consumers who foot the bill for this heavy-handed intervention, as well as anyone who relies on contracting work to get by.

“The entire gig economy has grown and been successful because it offers alternatives to consumers and workers alike, who all benefit. Changing employment law to make certain business relationships illegal will deprive millions of people of the opportunity of using these services, and cause even more repercussions for those who rely on them, both consumers and workers.

“California’s move is heavy-handed, paternalistic, and favors the monopoly of larger traditional companies more than people who rely on this new sector of our economy. That’s a shame,” said Ossowski.

A Consumer Choice Center survey from March 2019 found that 72% of Americans believe the government should protect the freedom of choice for consumers.

The same survey found that 69% of Americans think policymakers don’t spend enough time listening to consumers before proposing new regulations.

More information can be found on our website.


***CCC Deputy Director Yaël Ossowski is available to speak with accredited media on consumer regulations and consumer choice issues. Please send media inquiries HERE.***

—The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org.