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Opinion | Take That ‘Gig’ and Shove It


Corporate America has made a lot of money by treating millions of workers as independent contractors, denying them basic legal protections enjoyed by employees.

California is now on the verge of taking an important step to curb that sham.

The State Assembly passed a bill Wednesday that imposes strict limits on who can be classified as a contractor. The State Senate has already passed the measure, and Gov. Gavin Newsom has said that he will sign it into law. Beginning next year, companies like Uber, Lyft and other giants of the gig economy would be forced to treat hundreds of thousands of workers as employees. The legislation creates a valuable template that other states should emulate, particularly in the face of the Trump administration’s efforts to reduce worker protections.

Contractors are workers paid by a company, but not protected by most workplace laws. They are not guaranteed a minimum wage, overtime pay or any other benefits, for example.

The use of contractors can serve a legitimate purpose, as when a company pays an expert to perform a specific task. But companies have taken advantage of the law, hiring large numbers of contractors whom they have treated as an inferior grade of employee.

The practice is pervasive, but it has reached new extremes with the rise of companies like Uber and Lyft, whose business models are built on the use of such contractors.

California’s proposed law would put the burden on corporations to establish that a worker is a legitimate contractor. It codifies and broadens a State Supreme Court ruling last year that held that companies must meet a three-part test: demonstrating that the worker operates autonomously and is free to work for other companies, and that the work is not central to the company’s business. This is common sense: An expert brought in to fix a computer problem would qualify as a contractor; a person on hand every day to help with computer problems probably does not.

The legislation excludes a laundry list of professions, including doctors, dentists, lawyers and real estate agents, in which workers tend to benefit from their status as independent contractors and fought to be exempted. Uber, Lyft and their allies wanted to be added to that list, arguing their workers also enjoy life as contractors. But the dearth of drivers willing to make that case speaks for itself.

The companies are not done fighting. Uber and Lyft have sought leverage by threatening to spend tens of millions of dollars to put a referendum exempting their workers on the 2020 ballot. Lyft sent a message to its California drivers Wednesday, warning that under the bill, it might begin to require them to work specific shifts, and perhaps to drive in specific areas. The bill would give Lyft that power, but does not require the company to do so. If Lyft is correct that its drivers want flexibility, the company would only undermine its own business model by insisting on fixed schedules.

Uber, for its part, responded to the bill’s progress by telling reporters that its drivers would still be contractors because transportation is not Uber’s primary business.

It seems unlikely that California courts will sympathize with that argument. It’s also a bad look for Uber, which under its new management has made a lot of noise in recent years about turning over a new leaf and setting aside its old reputation as a scofflaw.

The real issue, of course, is that the new law would force Uber, Lyft and other companies with similar business models to share more of their revenues with their workers.

That could well result in higher prices for customers, too. But that would be nothing more than a necessary corrective. The companies and their customers have benefited at the expense of workers who lack the legal power to protect themselves: They have neither the minimum protections afforded to most workers nor the right to bargain collectively. The underpayment of unprotected workers is not a defensible business model.

There is also reason to suspect that the companies are overstating the likely pain. When New York City imposed minimum pay standards for Uber and Lyft drivers earlier this year, the companies offered similar warnings. So far, price increases are modest and ride volumes keep rising.

Drivers for Uber and Lyft in California would still lack the right to bargain collectively. The Trump administration has advised that the workers, as contractors under federal law, do not enjoy that right. But that leaves California free to create such a right under state law. Setting minimum standards is an important first step; allowing workers to bargain is a necessary second step.

And other states should follow close behind. It’s not enough to raise the minimum wage or to mandate family leave. Legislatures also must act to ensure those standards apply broadly.

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