On Thursday, Uber and Lyft, both companies that manage transport apps, threatened to end their operations in California, USA, due to a labor law recently instituted there and now extended to companies of the type.
Known as Assembly Bill 5 (Bill 5, in free translation, or just AB5), it was approved on January 1, 2020 to initially benefit employees in the entertainment industry, who should become real employees rather than mere hired, with minimum wage, overtime, paid leave and health coverage.
If it moves forward, the giants’ decision could negatively affect not only exclusive members of the platforms, but all those who depend on services to move around during the pandemic.
Misclassification and consequences
The problems started in May, when Xavier Becerra, California’s attorney general, along with other prosecutors, sued Uber and Lyft, alleging that they violated AB5 by wrongly classifying drivers as hired.
The decision was unfavorable to companies, which, even if appealing, saw, last week, the suspension of their services for not complying with the law. Alleging that they needed more time to readjust, they managed to extend operations until August 25, at 5 pm.
However, both must come up with concrete projects that will really fit the prerequisites – which, according to them, would eventually raise the prices of the races and reduce the number of drivers. In addition, they claim that the model would limit the freedom of action of those registered. To get around the situation, they proposed a vote.
Having each invested US $ 30 million in the so-called Proposal 22, if approved, they will guarantee health benefits to drivers who work at least 15 hours a week and will pay an additional 30 cents per kilometer.
Lorena Gonzalez, a California deputy and author of AB5, stated in her personal Twitter profile: “Uber and Lyft can stop crying now and work on reclassifying their drivers as employees.” What will actually happen will depend on the procedural steps and the outcome of Proposal 22.