California’s odious AB5 law continues to sow chaos in the state’s economy by pushing more and more government interference in the private sector. One of the biggest areas of concern is the state legislature’s continued war on the gig economy in support of the labor unions that fund all of the Democrats’ political campaigns. Despite a referendum to repeal parts of the bill remaining under discussion, an appeals court ruling this week has essentially gutted the business models of ride-sharing companies like Uber and Lyft. Absent some way to walk back this scheme, those services will likely either shrink to a fraction of their current size or disappear from the state entirely, along with the tens of thousands of jobs they provide. (National Review)
A California appeals court ruling caps a crusade against ride-sharing apps in the state.
Just days before Californians themselves were set to decide on the matter, a state appeals court has ruled that app-based ride-sharing companies Uber and Lyft must comply with state law AB5 and classify all of their drivers as employees rather than contractors. The ruling raises the possibility that the companies will simply end operations in the state altogether, both having stated previously that their business model depends on the flexibility of using contractors.
The companies claim, and drivers often confirm, that the flexibility of contract work is key to their operations.
This effort has, as I mentioned above, been driven almost entirely by California and national labor unions. They can’t forcibly enlist independent contractors into their unions and force them to pay dues, so they want the state to force Uber and Lyft to classify their drivers as regular employees. This, of course, means tracking all of their hours “worked” (even when they’re sitting in their cars waiting for a gig), paying them overtime, and at least the minimum wage plus “expenses.” Doing all of this would end up making your next Uber trip of five miles cost at least ten times what it does now in order to turn a profit, so they’re essentially putting the companies out of business.
That’s really been the goal of the labor unions and the Democrats who serve their commands from the beginning. Nobody in the liberal enclave gave a hoot about the drivers and their needs, a majority of whom regularly say that they prefer the flexibility that comes with being an independent contractor. This has all been yet another obvious ploy to support traditional taxi companies (and their unions) who can’t compete with Uber and Lyft’s better quality of service and competitive pricing.
The court’s explanation of its decision is laughable to the point of being obscene. The companies had claimed that forcing them to comply would effectively destroy their business model. The court disagreed, saying that Uber and Lift would “suffer no grave or irreparable harm” by being forced to comply, while pretty specifically stating precisely the harm being caused.
The panel said that there was just no reason to assume that forcing ride-sharing companies to operate as traditional employers would in any way hurt their business model, even as it conceded that that model was built around contractors.
“We recognize that defendants’ business models are different from that traditionally associated with employment, particularly with regard to drivers’ freedom to work as many or as few hours as they wish, when and where they choose, and their ability to work on multiple apps at the same time,” it said.
When New York City pulled a similar, but not quite as destructive trick, Uber responded in a predictable fashion. They locked most of their drivers out of the app except during peak usage hours and only allowed drivers who operated pretty much all of the time to take riders. That put most of the part-time drivers who were just looking for some extra income (a majority of them, in other words) out of work. The same will happen in California. Either that or, as they’ve already threatened, they’ll shut down the service entirely. Then all of the drivers will be out of work, just as the Democrats intended from the beginning.