After the California legislature passed AB5, a law designed to force tech companies to treat gig economy workers as employees rather than contractors, Uber a worn card pulled out of the hat: invent an excuse to just like that, not to do.
AB5 threatens Uber's core business model because it might force the company to treat its fleet of contract riders as employees, possibly giving them harmful OSH, including minimum wages, health care, compensation for workplace injuries, and the right to organize. This is done by codifying a three-part labor force classification checklist used by the Supreme Court in 2018 called the ABC test. One of these three tests is that a company, in order to classify an employee as a contractor, must perform tasks that are "outside of the hiring company's usual business".
Uber is a company that creates the Uber App. The Uber app has several features, the core of which – carpooling – generated $ 9.2 billion in sales last year, far more than other companies such as scooters, grocery deliveries and freight. It is obvious that persons using Uber rides for Uber customers follow Uber's "normal" course of business and that Uber controls the working conditions for these riders (minimum Uber ratings, fixed prices and compensation, etc.). ), as it is obvious that these other ventures are too.
Not so, says Uber! In his opinion, Uber's "normal course of business" is a "technology platform for different types of digital marketplaces". According to The New York Times, this means that the company will not preemptively reclassify its workforce and stop any attempt to do so. This happened in the following context:
Uber said Wednesday he was confident that his drivers would be independent be retained if the measure enters into force on 1 January. "Several previous decisions indicate that drivers' work is outside the usual framework of Uber's business, which serves as a technology platform for various types of digital marketplaces," said Tony West, Uber Chief Legal Officer. He added that the company was "no stranger to litigation".
In order to classify drivers as contractors, Uber would also have to prove, according to legal experts, that they do not run and control them and that they usually operate an independent rideship outside their work for Uber.
That's the absolute height of Silicon Valley's veiled bullshit: The law does not apply to us because something is something platform something somewhat marketplace something somewhat apps . Tony West, Chief Legal Officer of Uber, did not mention when he stated that the company was "not unfamiliar with legal battles", that they all emerged because the company consistently disobeyed the law.
As the Harvard Business Review wrote in 2017, Uber's core business model is probably to use regular non-commercial cars to circumvent regulations that apply to regular taxi companies, including regulations on "business insurance, business registration, commercial registration, special Driving licenses, background checks, rigorous inspections of commercial vehicles and countless other issues. (This does not even apply to the other obvious attempts to break or break the law, such as calling for drivers to work illegally in banned jurisdictions, tracking down reporters, developing a "greyball" tool, and the regulators of Uber has rigorously justified this behavior by stating that it is a technology company, and this in a sense means that the relevant laws do not apply to them – and like HBR The construction of "special capabilities to defend illegality", including extensive lobbying efforts in dozens of states to protect them from any consequences, is somewhat different.
That Uber, despite feverish efforts, is losing out to his competitors undercut and as much as possible to pass on to the drivers, never made a profit has, begins to show some cracks in its facade. After the IPO this year, the stock price has dropped, and there have been several discharge rounds. The self-propelled cars that are necessary to make Uber profitable are not in sight (if self-driving cars would make it profitable at all).
AB5 has the potential to make all of these problems even worse so Uber has every incentive to ruthlessly fight against it. The law is not self-binding, meaning that drivers and cities must fight Uber in a long legal battle. The victory is not sure. But Uber and two other big gig economy companies, Lyft and DoorDash, are apparently nervous enough to be preparing a $ 90 million war chest to support an electoral initiative that would effectively exclude them from AB5.