What AB5 Means for California’s Uber Drivers

Posted on February 11, 2020 | Written By: iadminlaw

California Assembly Bill 5 was signed into law last September. It changes the way companies classify their employees and has posed some challenges to the rideshare business model. To address these challenges, Uber has made some changes that could impact drivers and passengers alike. Learn more about these changes from an experienced Uber accident lawyer.

What AB5 Means for California’s Uber Drivers

Over the years, Uber drivers have had a few recurring requests— such as greater transparency about how much of each fare the rideshare company was withholding; and, the ability to see where passengers are headed before they agree to pick them up. Uber’s corporate office has generally dismissed these requests, noting that implementing them might impede the rideshare platform’s ability to function.

But soon, the company’s resistance may start to fade. That’s largely thanks to new California labor laws, which make it more challenging for businesses to treat workers like independent contractors. Assembly Bill 5, which was signed into law last fall, provides a much more rigid definition of what constitutes independent work. And it’s compelled Uber to try some of the very things it once deemed unworkable.

But what does it all mean for the rideshare company, for its drivers, and for its passengers? In this post, our top Uber accident lawyer will offer a quick summary.

A Victory for Rideshare Drivers?

Any Uber or Lyft accident lawyer will tell you that workers’ rights have long been contentious in the rideshare industry. At first glance, AB5 seems like a triumph for those who work for Uber, helping shore up their legal standing.

And yet, there are also some concerns. One new feature that Uber is experimenting with is a function that will let drivers set fares either higher or lower than the predetermined amount. Many have worried that this will pit drivers against one another, and ultimately lead to lower earnings.

There are also concerns that passengers may fare badly in these new changes; for example, some of the new tools could enable drivers to steer clear of low-income areas, leaving passengers in the lurch.

These changes are all part of Uber’s efforts to prove that it’s a technology platform first and foremost, not a transportation provider… and thus, that its drivers can be treated as contract workers, not as full employees. Many labor experts have expressed skepticism that Uber’s scheme will work out. Some say that the only way for Uber to prove its contention is to totally relinquish all pricing controls, something the company is surely uninterested in doing.

Coming Changes

For now, Uber is saying that it will keep a close eye on these experiments, and on the impact they make for drivers and passengers alike.

But some labor experts believe this is a high-stakes gamble. If Uber is found to be non-compliant with AB5, they will be compelled to start treating drivers as employees, which means offering them health insurance, benefits, etc.

Both Uber and Lyft are struggling right now in terms of their overall profitability and being forced to offer employee benefits could ultimately be disastrous for them.

Still, while the fate of the rideshare business is up in the air (at least in California), there are some momentary benefits, particularly for drivers. Uber has expressed an interest in giving their drivers a more enjoyable and independent experience. One clear example of this is allowing drivers more autonomy to see where their fares are headed in advance, before they accept the trip.

Uber and Lyft both did away with this function years ago, in several major markets, citing concerns about discrimination; drivers have long said that being able to map out their fares with greater precision is important for them to maximize their earnings. For now, anyway, those drivers can declare victory.

Another potential win for drivers? Uber has shifted toward a more transparent pay structure, cancelling their “upfront pay” initiative in favor of more precise ride fares based on time and distance. Drivers receive this amount exactly, minus a 25 percent service fee that goes to Uber. This provides passengers with less certainty about how much their trip will cost, but it allows drivers to have a clearer sense of their earnings.

There is also the experimental feature to let drivers set their prices lower or higher than Uber’s default, another gesture by the company to show that their drivers truly are “independent.”  This feature is available for drivers doing pickups from certain airports, for example. The potential problem is that Uber still uses its algorithms to pare passengers with their most affordable driving options, which could incentivize drivers to try to outdo one another in their pricing… meaning lower earnings for everyone.

Uncertainty Abounds

It’s not totally clear how any of these changes will ultimately impact the experience for drivers or passengers. There is also a lot of uncertainty about how these changes will help Uber to make its legal case.

While drivers may be excited by some of these changes, they don’t necessarily prove the company’s point about being a “technology platform” as opposed to a transportation provider.

Indeed, many labor experts say that Uber is very much a car service… and none of their changes do much to change or obscure that fact.

A possible explanation here is that the company is treating its workers better as a way of bolstering public support, in hopes that they can soon petition the State of California to make some allowances for gig companies.

If they’re successful in this, though, it may mean companies like Uber and Lyft have a lot more freedom to set the terms for their drivers… even if those drivers ultimately don’t agree.

Talk to a Rideshare Accident Attorney

As Uber and Lyft consider some significant changes, remember that your own rights as a passenger can still be upheld. If you’re ever involved in a rideshare accident in Los Angeles, contact an experienced rideshare accident attorney ASAP!