Business & Tech

Uber, Lyft Executives Urge California Compromise on Driver Pay

In this 2016, file photo, a car displays both Lyft and Uber stickers on its windshield. The companies, in a joint op-ed piece published Wednesday in the San Francisco Chronicle, are urging a California officials to consider a compromise that would keep their drivers from being considered employees.
In this 2016, file photo, a car displays both Lyft and Uber stickers on its windshield. The companies, in a joint op-ed piece published Wednesday in the San Francisco Chronicle, are urging a California officials to consider a compromise that would keep their drivers from being considered employees.

Faced with legislation in California that endangers their business model, Uber Technologies Inc. and Lyft Inc. are urging a compromise that would keep their drivers from being considered employees.

“We can make independent work better if we update century-old employment laws,” Uber CEO Dara Khosrowshahi and Lyft cofounders Logan Green and John Zimmer wrote in a rare, joint opinion column published Wednesday in the San Francisco Chronicle. “Many drivers are offering ideas to improve their experience, and companies like ours have a responsibility to come to the table prepared to do our part.”

The executives’ public appeal follows months of private efforts by the ride-share giants and other companies to secure support from California’s governor, state lawmakers, and labor leaders for some deal to shield them from a sweeping 2018 state supreme court ruling that makes it difficult for firms to claim their workers aren’t employees.

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Whether Uber and Lyft drivers remain independent contractors or must be treated as employees goes to the heart of the on-demand economy’s reliance on a casual labor force to keep costs down. For both companies, which just went public, the prospect of being compelled in their home state to completely overhaul how drivers are compensated is an existential threat.

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Under the April 2018 ruling known as Dynamex, workers are employees entitled to state wage-law protections unless they are conducting “work that is outside the usual course” of the company’s business. For companies whose core service is transporting customers via an army of drivers they claim are all contractors, that could be a challenging test to pass.

In their Wednesday op-ed column, Khosrowshahi, Green, and Zimmer say drivers value the flexibility that comes with being treated as contractors. “Very few jobs allow you to start or stop working whenever, wherever, as often as you want,” they wrote.

Rather than forcing the companies to classify them as employees, they say, California should embrace an alternative: Let them keep treating drivers as contractors, but guarantee the drivers some minimum pay during the time they’re picking up and dropping off passengers; create a company-supported benefits fund for perks such as paid time off; and establish an association for drivers to advocate for further improvements.