Speaker 1: Pushkin from Pushkin Industries. This is Deep Background, the show
Speaker 1: where we explore the stories behind the stories in the news.
Speaker 1: I'm Noah Feldman. It's almost a cliche to say that
Speaker 1: the future of work lies in gig work. That might
Speaker 1: not even be true, at least not if California gets
Speaker 1: its way. The governor there, Gavin Newsom, recently signed a
Speaker 1: law that will have a huge impact on the way
Speaker 1: the gig economy works in the state. The law, referred
Speaker 1: to as a B five, is supposed to make it
Speaker 1: harder for app based platforms like Uber and Lyft to
Speaker 1: classify their drivers as independent contractors rather than as full
Speaker 1: time employees. The law codifies and expands a twenty eighteen
Speaker 1: California Supreme Court decision known as the Dynamics Case. Today,
Speaker 1: on Deep Background, we're gonna do something a little different
Speaker 1: than we usually do. Instead of having just one long
Speaker 1: conversation about a topic, We're going to talk to two
Speaker 1: different people, one at a time, with very different perspectives
Speaker 1: on AB five. The first is Lorina Gonzalez. She's the
Speaker 1: California assemblywoman who actually sponsored the bill. I talked to
Speaker 1: her about why she believes in it and how exactly
Speaker 1: it will work when it goes into effect in January.
Speaker 1: Thank you so much for joining me. Let's start by
Speaker 1: talking about this important and interesting bill that you've introduced
Speaker 1: into the California legislature called AB five. That's the shorthand,
Speaker 1: I guess AB is Assembly Bill AM I right. Yes.
Speaker 1: AB five is connected to a decision that the California
Speaker 1: State Supreme Court made a couple of years ago, and
Speaker 1: it has to do with the essence of the gig
Speaker 1: economy and how employees should be treated under the law.
Speaker 1: Tell us what we need to know about this law.
Speaker 1: It basically says, look, in order to be in a
Speaker 1: pennant contractor, you have to actually do that type of
Speaker 1: business separately than this organization. You can't be doing the
Speaker 1: business of the company itself. So you know, if the
Speaker 1: company is a delivery company and you're a delivery driver,
Speaker 1: you probably work for the company. And so it's a
Speaker 1: pretty straightforward test. We often describe it as this, if
Speaker 1: you do the work of the company, you probably work
Speaker 1: for them. So that's the essence of the idea. And
Speaker 1: this is why from the standpoint of Uber or Lift
Speaker 1: or any of the other gig economy companies it's a
Speaker 1: disastrous decision for their business plan because it basically says
Speaker 1: that if they're in the business of driving people around,
Speaker 1: then a driver is an employee, is not an independent contractor, right,
Speaker 1: And of course now Uber says they're not in the
Speaker 1: business of driving people around, so this is going to
Speaker 1: be They say they're in the business of connecting people
Speaker 1: to the people who will drive them around, and that
Speaker 1: they're doing the connection. But that's a hard case to
Speaker 1: make out, at least under this test. The core issue
Speaker 1: classification cases is is a given person an employee and
Speaker 1: therefore entitled to the protections of state law for employees,
Speaker 1: or is the person an independent contractor not restricted in
Speaker 1: what he or she can do, but also simultaneously not
Speaker 1: entitled to the protections that state law gives employees. Correct? Correct.
Speaker 1: If you're an employee, you have a number of rights,
Speaker 1: including the right to minimum wage and over time, the
Speaker 1: right to workers compensation and employment insurance. The employer has
Speaker 1: to put in their their required seven point five percent
Speaker 1: to Social Security and to Medicare their contribution. You have
Speaker 1: the right in California to paid sick days and paid
Speaker 1: family leave. You have the right to, of course join
Speaker 1: a union, so there are a number of individual rights. Uh,
Speaker 1: there's there's protections against sexual harassment, there's protections against discrimination
Speaker 1: that employees are are awarded. So that's all the good
Speaker 1: stuff that employees get if they're classified as employees. Why
Speaker 1: do some people want to be classified sometimes as independent contractors. Well,
Speaker 1: some independent contractors really are small businesses and people want
Speaker 1: to operate in that way their tax benefits. Sometimes for
Speaker 1: an individual who has multiple clients, who is writing off
Speaker 1: you know, a home office and gas and expenses where
Speaker 1: they can service multiple clients but with the same sort
Speaker 1: of needs and in which case they really are often
Speaker 1: acting as a small business that a lot of Unfortunately,
Speaker 1: some employees think it's better to be independent contractor because
Speaker 1: they assume they don't need to pay as much in taxes.
Speaker 1: That's often because they don't realize their tax implications and
Speaker 1: aren't paying them. And there's so many small independent contractors
Speaker 1: or have been in California that there hasn't been a
Speaker 1: ton of enforcements, so we know we've lost a lot
Speaker 1: of payroll taxes and taxes that are become the responsibility
Speaker 1: of the contractor when the employer isn't pay for them.
Speaker 1: But that, of course is unfortunate for the small business
Speaker 1: person who doesn't realize they owe these taxes. Often, big
Speaker 1: companies like Uber and Lyft or door Dash and many
Speaker 1: many others, they say, we want to be disruptors. And
Speaker 1: what they mean by disruption is they're not going to
Speaker 1: have to treat the people who work for them as employees.
Speaker 1: And they have a whole theory about why that's a
Speaker 1: good thing, and others have a view about why it's
Speaker 1: a bad thing. But the point is it's a change,
Speaker 1: and the State Supreme Court, I guess, in the Dynamics decision,
Speaker 1: had to set down a rule to help clarify whether
Speaker 1: someone counts as an employee or an independent contractor when
Speaker 1: working for something like one of the gig economy businesses.
Speaker 1: And what's the basic rule? I think there are three parts,
Speaker 1: aren't there? There are three parts? But I want to
Speaker 1: step back for a minute, because a lot of people
Speaker 1: do identify this as a kind of a knee jerk
Speaker 1: to the gig economy, when in fact, the Dynamics decision
Speaker 1: had been going through the courts for ten years. It's
Speaker 1: really not what we think of as the Ubernlift Postmates
Speaker 1: since Dart kind of economy. These were delivery drivers that
Speaker 1: that predated a lot of the gig economy work. And
Speaker 1: so although it does affect the gig economy and that
Speaker 1: has been the largest abuses we have seen, it was
Speaker 1: never a decision or a bill that simply was targeted
Speaker 1: at ubern lift. And I think that's important because a
Speaker 1: lot of folks who have been caught up in this
Speaker 1: bill said, well, why are you targeting us? It was
Speaker 1: supposed to be towards ubernlift. No, it's about misclassification in general.
Speaker 1: And if you look at a state like California, where
Speaker 1: misclassification cost about seven billion dollars a year to our
Speaker 1: state and thus to our taxpayers, this is a larger
Speaker 1: decision and a larger issue that affects many more people
Speaker 1: than those in the gig economy. How are you measuring
Speaker 1: the cost to the California's economy when you say seven
Speaker 1: a billion dollars? What's that? What is that number? What
Speaker 1: are you measuring? That comes from? Of course the state
Speaker 1: Labor Commissioner's office, but it includes everything payroll taxes, of course,
Speaker 1: it to workers compensation claims that aren't paid for when
Speaker 1: somebody doesn't have workers compensation. Often doesn't have healthcare either,
Speaker 1: and so when they're hurt on the job, it's we
Speaker 1: as taxpayers pick it up at the emergency room, so
Speaker 1: indigent care. When somebody loses their job, they no longer
Speaker 1: have a job, they don't have unemployment insurance, So we
Speaker 1: often have to pick those types of costs up. When
Speaker 1: somebody isn't being paid enough, obviously we have to pay
Speaker 1: in terms of food stamp, subsidize housing, and subsidize free
Speaker 1: lunch program. So there's a number of ways that we
Speaker 1: subsidize companies who must classify their workers, and it provides
Speaker 1: a cost, of course to the state. As you describe
Speaker 1: a B five, it sort of sounds like no reasonable
Speaker 1: person could disagree with it, and I'm sure that as
Speaker 1: a sponsor of the bill, that's exactly what you believe. Nevertheless,
Speaker 1: in the real world, there are people, including even some
Speaker 1: uber or lift drivers, who are nervous about the possibility
Speaker 1: that they will lose the flexible ability that they value,
Speaker 1: and perhaps are also nervous about thinking of themselves as
Speaker 1: employees when they haven't considered themselves as employees. They've thought
Speaker 1: of themselves to a great extent as independent contractors. What
Speaker 1: would you say to people who have those fears or concerns.
Speaker 1: I take it the part of your job as a
Speaker 1: legislators get the law pass. A part of it is
Speaker 1: also convincing the people who will be affected by the
Speaker 1: law that it will make their lives better and will
Speaker 1: not make it worse. So what would you say? And
Speaker 1: that's true. And I kind of have a unique perspective
Speaker 1: on this because I came out of organized labor. I
Speaker 1: was a labor leader when I was elected to the
Speaker 1: State Assembly, and so I am used to dealing with
Speaker 1: workers who operate out of fear. Often in organizing drives,
Speaker 1: you see it a lot. In contract negotiations, you see it.
Speaker 1: And so I understand and am very empathetic to workers
Speaker 1: being afraid, being ill convinced of things by bosses who
Speaker 1: often lie or mislead those workers. And that's what we've
Speaker 1: seen here, and we try to be very obvious these companies,
Speaker 1: whether it's Uberlift or Postmates, Instacart, whoever it is, they're
Speaker 1: controlling the schedules of these workers. Now, so this so
Speaker 1: called flexibility is an interesting argument, and sometimes you have
Speaker 1: to break it down and have the individual discussions with
Speaker 1: the drivers. They often know, you know Instacart, for example,
Speaker 1: we had a people complaining that if you try to
Speaker 1: not take a job, they won't pass you on to
Speaker 1: the next job. Right you can't reject the job. So
Speaker 1: that's not quite the flexibility they say that they have,
Speaker 1: or that they convince their drivers they have. You can't
Speaker 1: just wake up at two in the morning in an
Speaker 1: industrial area where there are no rides and say you're
Speaker 1: a lift driver and be carting somebody, because if it's
Speaker 1: not available, it's not available. We've seen in New York City,
Speaker 1: even with workers being independent contractors, that uber and lift
Speaker 1: or are now controlling which parts of the city that
Speaker 1: they can give rides in. We know now with the
Speaker 1: way they INCENTI yes, certain areas and ensure that people
Speaker 1: can actually make some money. They push people to certain
Speaker 1: areas of the city during certain times. So there is
Speaker 1: a level of control being operated now, and you often
Speaker 1: have to break it down for the drivers and have
Speaker 1: that discussion. That all makes perfect sense to me. I
Speaker 1: think there's not the dedependence that people necessarily imagine that
Speaker 1: there is. But what about the argument that there will
Speaker 1: be even less independence if the companies now, for example,
Speaker 1: know they have to pay minimum wage for an hour
Speaker 1: that the driver has worked, and then the driver wants
Speaker 1: to say I'm available at a time when statistically it's
Speaker 1: improbable that there will be enough jobs there. I would
Speaker 1: imagine that what I would do if I were the company,
Speaker 1: as I would just say, well, you can't, you can't
Speaker 1: work this hour because we just don't think you're going
Speaker 1: to make enough to get past the minimum wage. And
Speaker 1: so it might be that there's you know that there
Speaker 1: is a limitation to freedom now, but wouldn't there be
Speaker 1: even more limitations once they are a categorization of drivers
Speaker 1: as employees. Well, you know, that's ultimately up to the company,
Speaker 1: and that type of flexibility, whether you're an independent contractor
Speaker 1: or an employees always up to the company. And so
Speaker 1: I think that that's a red herring because I think
Speaker 1: it's happening now, and so M yes, there there are
Speaker 1: people who will say, but you know, what if I
Speaker 1: want to drive for five dollars an hour? We have
Speaker 1: laws in this country. You know, we've heard it plenty
Speaker 1: of times. What if my thirteen year old one wants
Speaker 1: to work, you know, we don't allow that to happen.
Speaker 1: What if they want to work in a factory and
Speaker 1: make subminimum wage. You know, we have laws for a
Speaker 1: reason so that there's an even playing field. And we
Speaker 1: know that the so called decisions by some workers to
Speaker 1: want to undercut basic labor laws hurt all workers. And
Speaker 1: so you know, the vast majority I think of drivers
Speaker 1: that we talked to want to make above minimum wage.
Speaker 1: Of course they want to have the benefits of employment. Well,
Speaker 1: with that, you have to require rules. And one of
Speaker 1: the things I hear most often, not just from drivers,
Speaker 1: but you know freelancers in general, is if I want
Speaker 1: to be an independent contractor, why can't I just do that? Well,
Speaker 1: you can go start your own business, right, nothing prevents
Speaker 1: you from going in starting your own car business, for example,
Speaker 1: where you can shuttle people back and forth, but there
Speaker 1: are rules that you have to abide by. You can't decide.
Speaker 1: We live in a society where you can't decide I'm
Speaker 1: going to undercut basic labor laws which affect and hurt
Speaker 1: other people because I want to. I mean, you can
Speaker 1: do that. The worker themselves aren't going to be held liable,
Speaker 1: but the companies can't hire people in that kind of situation.
Speaker 1: I know that journalists are not the main constituency that
Speaker 1: you're setting out to protect here. But I'm a journalist
Speaker 1: and so it's on my mind, and I don't think
Speaker 1: I'm alone in this respect. One of the things that
Speaker 1: AB five does is, if I'm not mistaken, it says
Speaker 1: that if you're a freelance writer and you write more
Speaker 1: than thirty five articles in a year for a given publication,
Speaker 1: then you have to be treated as an employee of
Speaker 1: that publication. So I, for example, write a column a
Speaker 1: couple times a week for Bloomberg. If I lived in
Speaker 1: California and Bloomberg was in California, they would have to
Speaker 1: make me an employee. They couldn't treat me as an
Speaker 1: independent contractor as they presently do, right, And I think
Speaker 1: some journalists are worried about this. I mean it strikes me,
Speaker 1: as you know, I actually do feel genuinely like an
Speaker 1: independent contractor sitting in my office. I have a real
Speaker 1: job for a university, and then I also write in
Speaker 1: my column, so I don't feel like I'm an employee
Speaker 1: of the of the entity that publishes my articles. What's
Speaker 1: the what's your response to that? To that number, and
Speaker 1: why did you why not an't make an exemption for journalists. Well,
Speaker 1: I didn't make an exemption for journalists because we worked
Speaker 1: with actual staff journalists. We worked with the unions that
Speaker 1: represent journalists and the publications themselves. And there has been
Speaker 1: a massive abuse of the use of permalancers or freelancers,
Speaker 1: independent contractors in journalism, and most journalists will tell you
Speaker 1: that that that abuse exists. So if you provide a
Speaker 1: full exemption, especially in a time when you kind of
Speaker 1: see this resurgence of unions in the newsroom, you're really
Speaker 1: going to put those efforts at jeopardy. Journalism has changed,
Speaker 1: But that's not a reason to basically get the career
Speaker 1: of journalism. Let me ask you what is really a
Speaker 1: philosophical question. And you know, I understand that you come
Speaker 1: out of labor, so I get I have some inkling
Speaker 1: of where you'll answer me from. But the philosophic question
Speaker 1: is sort of this. To me, there's very little doubt
Speaker 1: that there are lots of industries where unionization is absolutely
Speaker 1: necessary in order that management not exploit workers. And then
Speaker 1: there are some industries where the workers actually have either
Speaker 1: a reasonable amount of bargaining power or significant independence in
Speaker 1: the kinds of judgments and decisions they make, where you know,
Speaker 1: it makes sense if people want to be independent contractors,
Speaker 1: they should be able to. And then in between there's
Speaker 1: the very complicated, messy world in which we actually live,
Speaker 1: where you have to go deep into the weeds when
Speaker 1: it comes to those really hard choices. As I understand it,
Speaker 1: a B five for the most part, sets the presumption
Speaker 1: in favor of a person being an employee, and it's
Speaker 1: pretty hard to get out of that. I'm wondering why,
Speaker 1: in the margin where it's genuinely hard, where it's tricky,
Speaker 1: why not set the default the other way. Why not say,
Speaker 1: let's experiment, let's try new sorts of things out, and
Speaker 1: then over time, if it's not working, we can switch
Speaker 1: it back the other way. Why isn't that sort of
Speaker 1: spur to possible innovation, even though granted we might go
Speaker 1: too far in some instances. So I hate to called
Speaker 1: exemptions because there's no pure exemption. You still have requirements
Speaker 1: to ensure somebody's an independent contractor. But in terms of
Speaker 1: who should be considered that, we think a lot about
Speaker 1: barriers to entry into that profession. So the higher barrier
Speaker 1: into the entry of that profession, the more comfortable we
Speaker 1: are saying this person has individual bargaining power. So for example,
Speaker 1: if you're a doctor, a lawyer, you know, if there
Speaker 1: is a many years of school, specialized schooling, testing, there's licensing,
Speaker 1: you know, we feel a little more comfortable like that
Speaker 1: individual can make these decisions for themselves and are actually
Speaker 1: making these decisions and not just subject to an employer
Speaker 1: saying this is what we're going to do, right, And
Speaker 1: everybody has to then aqueous to that because there's so
Speaker 1: many other of these type of employees out there who
Speaker 1: are willing to work for less. That's basically how we
Speaker 1: end up with a race to the bottom. And does
Speaker 1: that not worry you as being I mean, it's a
Speaker 1: fascinating line that you're drawing. I'm deeply fascinated by this
Speaker 1: idea that you know, the more education you have, the
Speaker 1: higher the barrier to entry, them more confident we are
Speaker 1: that you have bargaining power. It sounds great, not just
Speaker 1: not just education though, because fine artists are also exempted
Speaker 1: through this process, and fine arts art necessary to become
Speaker 1: an artist. You mean, well, there's a specialize I think
Speaker 1: talent that you have that allows you to have more
Speaker 1: bargaining power. And you ask another question, and I want
Speaker 1: to get to that, why not air on the side
Speaker 1: of and I will put it in my ideological stance,
Speaker 1: why not air on the side of the company instead
Speaker 1: of the worker, so and allow innovation because we're going
Speaker 1: to allow these exemptions and see where it goes from there.
Speaker 1: And I'd say, the reason I haven't done that, and
Speaker 1: I've been very judicious. I feel like in trying to
Speaker 1: write a law that makes the most amount of sense
Speaker 1: for workers is being in the legislature for the past,
Speaker 1: I guess six years now. I know that it is
Speaker 1: always hard to undo an imbalance of power that's in
Speaker 1: favor of corporations and of companies and that hurt workers,
Speaker 1: that it would be much easier to correct things in
Speaker 1: the other way. And so I was protective of workers,
Speaker 1: and that was I think a very intentional decision in
Speaker 1: order to say, yes, we might have to in the
Speaker 1: future and for innovative purposes if you will, or new
Speaker 1: kind of I guess professions that will come up. We
Speaker 1: may need to re examine some of this, but it's
Speaker 1: much easier to say this is the broad labor law
Speaker 1: and deal with it, and that way the power is
Speaker 1: in the hands of the workers. That's a kind of
Speaker 1: structural reform we need in this country in order to
Speaker 1: rebalance kind of the large problems we have with income
Speaker 1: inequality and with workers being exploited at work. And I
Speaker 1: guess the other side would say, unless that scares away business, right,
Speaker 1: because we all want people to have jobs. And then
Speaker 1: the question is, might it be the case that too
Speaker 1: much regulation would create a disincentive for businesses to experiment
Speaker 1: and to do new things. No one, even the companies,
Speaker 1: don't admit that their interest is primarily in promoting the
Speaker 1: interests of the companies. They would say, well, if our
Speaker 1: company does well, we'll create new jobs and that will
Speaker 1: make everybody better off. Yes, where at times of record employment,
Speaker 1: if you will, record low unemployment, and yet at staggering
Speaker 1: rates of income inequality and underemployment, And so it seems
Speaker 1: like the perfect time to say, if you're going to
Speaker 1: offer a job, it should be a real job, a
Speaker 1: sustainable job where somebody can actually live off of having
Speaker 1: just one job. And so I think the timing for
Speaker 1: this is perfect. We also have and this is kind
Speaker 1: of interesting to me. California is a large state. It
Speaker 1: could be, you know, a country in its own However,
Speaker 1: we also have a number of states who number one,
Speaker 1: already had something like an ABC test on the books Massachusetts,
Speaker 1: for example. We see New Jersey enforcing their ABC test
Speaker 1: for unemployment insurance against ubern left their states who already
Speaker 1: have had this but haven't really enforced it as much.
Speaker 1: And then we have states who are going towards it.
Speaker 1: We have the states like New York holding hearings on
Speaker 1: what independent contractor misclassification law would look like if it
Speaker 1: would be the ABC test. So although California is leading
Speaker 1: the way, I anticipate a number of especially left leaning
Speaker 1: states to be going in that direction. And of course
Speaker 1: we have a situation where almost every presidential candidate on
Speaker 1: the Democratic side has endorsed this approach and came out
Speaker 1: supportive of California's AB five of reclassifying workers as employees
Speaker 1: with the right to organize and with really re empowering
Speaker 1: unions to research in the United States. So I think
Speaker 1: the timing on this is perfect because a company can
Speaker 1: try to avoid a California law for so long, but
Speaker 1: operating on a level plane field is important. And the
Speaker 1: last thing I'd say about this, and I think this
Speaker 1: is really important. We heard from a lot of businesses
Speaker 1: who are actually grateful for us doing this. And that's
Speaker 1: because when you are a business that's operating by the
Speaker 1: rules and by the rules that seem very obvious, and
Speaker 1: you're undercut by a company that comes in and says,
Speaker 1: I'm just going to be innovative, I'm going to hire
Speaker 1: you by app and so I no longer have the
Speaker 1: same cost as you do. Well, that's a competitive disadvantage
Speaker 1: that hurts society, it hurts the state, it hurts the worker,
Speaker 1: and it hurts the business that was planed by the rules.
Speaker 1: And so it is time to treat everybody the same
Speaker 1: and fairly. And I think that AB five helps us
Speaker 1: do that. From over here on the other coast, we'll
Speaker 1: watch your bill and your career with great interest and excitement.
Speaker 1: So thank you very much for joining in. Good luck
Speaker 1: with everything that you're doing. Thank you. Of course, not
Speaker 1: everyone thinks that AB five is fair or that it's
Speaker 1: a smart economic move. Uber Lyft and DoorDash have launched
Speaker 1: a ninety million dollar campaign in support of a ballot
Speaker 1: initiative that would ask California voters essentially to allow them
Speaker 1: not to be covered by the law in exchange for
Speaker 1: providing some improved conditions for their drivers. As part of
Speaker 1: this measure, the companies are promising to provide lots of
Speaker 1: their drivers with benefits they don't currently have, like minimum
Speaker 1: wage standards and some healthcare stipends, without officially turning them
Speaker 1: into employees. I spoke to Adrian Durban, a spokesperson for Lyft,
Speaker 1: about what it would be like if all lift drivers
Speaker 1: suddenly became employees rather than contractors, and why the companies
Speaker 1: are so reluctant to let that happen. Adrian, I'm so
Speaker 1: pleased that you were able to join us. Describe from
Speaker 1: the perspective of Lift your employer just how disastrous is
Speaker 1: AB five for your business model. Sure well, thanks so
Speaker 1: much for having me. I appreciate the opportunity to be here.
Speaker 1: You know, I think when we're talking about the issue
Speaker 1: of AB five, it's important to take a step back
Speaker 1: and think about what does the driver community on the
Speaker 1: lift platform look like. Ninety one percent of drivers who
Speaker 1: drive with Lift drive less than twenty hours per week,
Speaker 1: and actually seventy six percent drive less than ten hours
Speaker 1: per week. These are people who are using the platform
Speaker 1: to earn extra income on a schedule that works for them.
Speaker 1: A lot of people are they have other jobs and
Speaker 1: they're earning extra income to supplement that or their students
Speaker 1: or their caregivers or retirees, and they either aren't able
Speaker 1: to work full time or have no interest in working
Speaker 1: full time, so they're coming to lifts and other platforms
Speaker 1: like it to earn extra money on a schedule that
Speaker 1: works for them. And what they tell us overwhelmingly that
Speaker 1: the most important thing to them, in addition to earning
Speaker 1: income is that flexibility. So what we've been focused on
Speaker 1: here in California is protecting that flexibility while strengthening the
Speaker 1: platform and making it better for drivers in terms of
Speaker 1: providing additional benefits, protections and guarantees for let's say the
Speaker 1: seventy six percent of your drivers who drive for less
Speaker 1: than ten hours a week. Yeah, what happens to them
Speaker 1: if they are deemed to be employees? Is there any
Speaker 1: reason they just can't continue to work those same hours
Speaker 1: but just get different, different pan different benefits. Sure, I'm
Speaker 1: glad you asked that question. So if ultimately drivers were
Speaker 1: classified as employees, a couple of things would happen. First,
Speaker 1: we wouldn't need nearly as many drivers as currently are
Speaker 1: working on the platform, we would have to behave like
Speaker 1: every other major employer that has employees for their workforce.
Speaker 1: And what that means is drivers would be put on
Speaker 1: set schedules, on shifts. And let me explain why that's
Speaker 1: why that's the case. Yeah, why would you tell why
Speaker 1: would you have to do that? That's the big question. Yeah. So,
Speaker 1: under an employment model, drivers would earn would start earning
Speaker 1: their wage from the moment they turn the app on
Speaker 1: until they to the moment they turn the app off. Currently,
Speaker 1: what happens is that drivers get paid during what we
Speaker 1: call booked time, which is when they have they're on
Speaker 1: their way to pick up a passenger, or they have
Speaker 1: a passenger in the car. Under an employment model, they
Speaker 1: would be paid for the entire time they have the
Speaker 1: app on. So you can imagine why we would have
Speaker 1: to put drivers onto shifts. For the same reason that
Speaker 1: companies like Starbucks don't allow their baristas to just come
Speaker 1: in and work whenever they feel like it, for however
Speaker 1: long they feel like it. They need to match their
Speaker 1: supply of workers to the demand that exists at a
Speaker 1: particular time. So when Starbucks, obviously they have more barista's
Speaker 1: working in the morning, when lots of people are buying coffee,
Speaker 1: not so many in the late afternoon and evening when
Speaker 1: people are not buying coffee, So we would be really
Speaker 1: forced to implement a similar model. If we didn't do that,
Speaker 1: you can imagine the situation where drivers would sign up
Speaker 1: for as many apps as possible. Right now, many drivers
Speaker 1: do work for multiple apps, and they can do that
Speaker 1: at the same time. They can turn on Uber and
Speaker 1: Lyft and DoorDash and just wait for the next ride
Speaker 1: request to come in. Under an employment model, if you
Speaker 1: were paying for the entire time they had the app on,
Speaker 1: then there would be nothing to prevent somebody from turning
Speaker 1: on all the apps, going to an area where there
Speaker 1: wasn't going to be any demand, and getting paid wages
Speaker 1: from each of those companies while not doing any work.
Speaker 1: So you can understand why that wouldn't make sense. So
Speaker 1: under an employment model, we would have no choice but
Speaker 1: to put drivers on scheduled shifts, which is something they've
Speaker 1: told us overwhelmingly they oppose. So I hear what you're saying,
Speaker 1: and certainly from the standpoint of your seventy six percent
Speaker 1: of drivers who worked through than ten hours a week
Speaker 1: for them, if many of them were no longer are
Speaker 1: working according to their own schedules, there might be a
Speaker 1: significant change for them. What about from the company's perspective, however,
Speaker 1: I mean, just because seventy six percent of your drivers
Speaker 1: work through then ten hours a week, doesn't mean that
Speaker 1: seventy six percent of the rides that you organize are
Speaker 1: by those drivers. In fact, it must be the other
Speaker 1: the other way around. What what percentage of the rides
Speaker 1: that you arrange are being given by drivers who work
Speaker 1: more than twenty hours a week. I don't have that data.
Speaker 1: I don't think we disclose that data. You're right, very important.
Speaker 1: It would be pretty important for understanding the question. I mean,
Speaker 1: because you can imagine a person on the other side saying, look,
Speaker 1: you're you're right. We concede the point that for the
Speaker 1: ten hours a week drivers, this may not be what
Speaker 1: they want, But we care more about the drivers who
Speaker 1: are effectively treating their job as a you know, with
Speaker 1: with lift or with uber or with or dash as
Speaker 1: a effectively as a full time job, and we're trying
Speaker 1: to improve things from them, even admitting we're doing it
Speaker 1: at the expense of the part time employees, because after all,
Speaker 1: that's what you know what labor offen and advocates for.
Speaker 1: You know, labor unions are often in favor of improving
Speaker 1: the standards of living for people who are full time
Speaker 1: employees at the expense of part time employees, and I
Speaker 1: think they usually are willing to not always, they're usually
Speaker 1: willing to be open about that. What I can tell
Speaker 1: you is that even among the drivers who work more
Speaker 1: than twenty hours a week, they still tell us that
Speaker 1: they value the flexibility quite a bit, in fact, more
Speaker 1: than anything other than their income. So even if you're
Speaker 1: working full time, one of the things that they love
Speaker 1: about this type of work is that, you know, if
Speaker 1: you have if you have children and you need to
Speaker 1: take your kid to the doctor, you don't need to
Speaker 1: get permission from your boss to take time off. If
Speaker 1: you decide you want to watch a World Series game
Speaker 1: because your favorite team is in the World Series, you
Speaker 1: can decide I'm not going to work at that time.
Speaker 1: So even the drivers who are working more than twenty
Speaker 1: hours a week value the flexibility and the ability to
Speaker 1: set their schedule, even if they're working, you know, as
Speaker 1: you said, more than twenty hours a week. So what
Speaker 1: we're what they've also told us and this goes for drivers,
Speaker 1: no matter how many hours they work. They are looking
Speaker 1: for additional protections and benefits, and that's what we've put
Speaker 1: on the table here in California. So we've proposed a
Speaker 1: minimum wage floor so that they are guaranteed that they'll
Speaker 1: earn at least a certain amount every hour that they
Speaker 1: are working. We are also putting on the table a
Speaker 1: healthcare benefit, and then on top of the healthcare, we're
Speaker 1: also putting in place other benefits, so occupational accident insurance coverage,
Speaker 1: so if you get injured on the job, you'll be
Speaker 1: compensated for that, which is not something that they currently exists,
Speaker 1: and we recognize that that's that's an issue for drivers,
Speaker 1: so we've put that on the table. And you're proposing
Speaker 1: this in the form since the California legislature already passed
Speaker 1: eighty five and it's been signed into law. You're proposing
Speaker 1: this as a referendum that would seek essentially an exemption
Speaker 1: for participating companies from the law that was passed by
Speaker 1: the legislature. Am I get that right? Yeah, So it's
Speaker 1: what's referred to as a ballot initiative, and we are
Speaker 1: in the process right now of getting the title in summary,
Speaker 1: which is what they call it, and that will happen
Speaker 1: sometime before the end of the year, and then we
Speaker 1: would go out and collect signatures to qualify for the
Speaker 1: ballot in November of twenty twenty. I would say that
Speaker 1: there's a bit of a distinction. I wouldn't call it
Speaker 1: an exemption from AB five. There's actually quite a few industries.
Speaker 1: More than fifty industries were actually exempted outright from AB five.
Speaker 1: What we are saying is, let's create a new model.
Speaker 1: The initiative that we are going to put on the
Speaker 1: ballot is based on feedback that we've received from thousands
Speaker 1: of drivers, and this is across multiple platforms about Okay,
Speaker 1: what do you like about this work and what would
Speaker 1: you like to see improved? And again, what they tell
Speaker 1: us overwhelmingly that what they love about it is the flexibility,
Speaker 1: which goes out the window under an employment model. But
Speaker 1: they want they want more guarantees around pay, they want healthcare,
Speaker 1: they want injury protect action, they want discrimination protection, they
Speaker 1: want an ability to appeal if they are deactivated by
Speaker 1: by the companies for whatever reason. Those are all the
Speaker 1: things that are included in this ballad initiative and again,
Speaker 1: it's based on the feed the feedback that we got
Speaker 1: from them. May I just ask, so you know, what's
Speaker 1: fascinating to me is clearly somebody who is working a
Speaker 1: relatively small number of hours is going to value flexibility,
Speaker 1: and even someone's working a lot of hours unquestionably will
Speaker 1: get some benefit out of the fact of work our flexibility.
Speaker 1: I assume though, that the more of your income you
Speaker 1: rely on a ride sharing app to earn, the more
Speaker 1: that your flexibility is constrained by when there are actually
Speaker 1: rides available out there. You might say, you know, in
Speaker 1: my perfect preferences to work between two and five in
Speaker 1: the morning, but there just aren't that many rides out
Speaker 1: there relative to cars, so I'm not going to work
Speaker 1: those hours. So I guess what I'm wondering is what
Speaker 1: would you say to supporters of the bill who would say, yeah,
Speaker 1: we recognize that there's some sacrifice of flexibility, but in
Speaker 1: an increasingly gig based economy, as more and more companies
Speaker 1: come up with models like this, effectively, the results of
Speaker 1: this this new disruptive employment model are to leave people
Speaker 1: without the kinds of protections that are traditionally afforded to
Speaker 1: to full time employees. I mean that's like, that's not
Speaker 1: I'm trying to describe an argument that's the most reasonable argument,
Speaker 1: not an emotionally driven argument, a rational logical argument that
Speaker 1: that says, you know, look, flexibility will be a cost.
Speaker 1: We acknowledge that, but the benefit outweighs the cost. Yeah,
Speaker 1: And what I would say to that is that is
Speaker 1: that we disagree that it outweighs the cost. When you
Speaker 1: ask drivers what matters, they tell us flexibility. I would
Speaker 1: also say that the under the proposal that we put forward,
Speaker 1: the more you work, the more the more benefits would
Speaker 1: accrue to you. So someone who works less than ten
Speaker 1: hours a week is not going to qualify for healthcare,
Speaker 1: but someone who works more than fifteen or twenty five
Speaker 1: hours a week will, So you'd get more. The benefits
Speaker 1: kind of scale depending on how much you're actually you're
Speaker 1: actually working. So we've tried to devise a proposal that recognizes,
Speaker 1: you know, some of the points that you're making, which
Speaker 1: is that you know, if you drive more, then you
Speaker 1: should you should get more. And that's that's what this
Speaker 1: proposal actually does. Let's say you don't win, you know,
Speaker 1: you get this, you get the signatures it goes on
Speaker 1: the ballot and it doesn't garner a majority of California voters.
Speaker 1: What will that mean in practice? I mean, as you said,
Speaker 1: you'll have to move to more of an employment model.
Speaker 1: Would would Lift still continue to do business in California? Um? Yes,
Speaker 1: I mean, let's let's be clear at one thing. What
Speaker 1: what AB five does is not to automatically reclassify drivers
Speaker 1: as employees. What it is is it's a It's it's
Speaker 1: legislation that codifies and extends the so called ABC tests
Speaker 1: for contractor classification. And that's actually been been an effect
Speaker 1: in California since April of last year with the Dynamics
Speaker 1: Supreme Court ruling. So, you know, I think there's a
Speaker 1: misperception out there about what AB five actually does because
Speaker 1: of the way it's been characterized in the media and elsewhere,
Speaker 1: and that people often refer to it as the bill
Speaker 1: that makes Lift and Uber drivers employees. It doesn't do that.
Speaker 1: It puts in place a new and kind of more
Speaker 1: more stringent test to decide whether somebody is an employee
Speaker 1: or a contractor. But under that test, under that test,
Speaker 1: I mean, we could walk through the elements, but is
Speaker 1: it would it be your your position that your drivers
Speaker 1: do qualify as independent contractors under that test. I mean,
Speaker 1: the three elements are basically degree of control of the employee, UM,
Speaker 1: whether the employee is working outside the main business of
Speaker 1: the company, and whether they're in a customarily independent, you know,
Speaker 1: line of work. And so I can imagine arguments on
Speaker 1: all three of those things. But under the under the
Speaker 1: law and under the state Supreme Court decision, you guys
Speaker 1: would have to prove that you met all three of
Speaker 1: those things in order for your drivers not to QUALFI
Speaker 1: is that what you would do? You would take it
Speaker 1: to accord and try to make that argument. Yeah. Well,
Speaker 1: I think it's important to point out that the ABC
Speaker 1: test does actually exist in other states where we operate successfully.
Speaker 1: So again, it doesn't just because AB five becomes law
Speaker 1: doesn't immediately mean that drivers are classified as employees fight however,
Speaker 1: I think that. Yeah, but we also are recognizing that
Speaker 1: the status quo is not sufficient, and we want to
Speaker 1: make things better. We want to strengthen the protections for drivers.
Speaker 1: We want to add benefits and minimum wage guarantees. I mean,
Speaker 1: we think there's an opportunity here to modernize labor laws
Speaker 1: that we're you know, basically written decades ago, and on
Speaker 1: our current system we have it's a binary choice. You're
Speaker 1: either an employee or you're an independent contractor. But we're
Speaker 1: trying to create is a new model that protects the
Speaker 1: independent status and the flexibility, but provides many of the
Speaker 1: benefits that employees get. There are many other countries that
Speaker 1: have a third model, and we see no reason why
Speaker 1: why we couldn't do so here. We think that the
Speaker 1: proposal we've put on the table really strikes strikes the
Speaker 1: right balance between protecting what's what's so great about this
Speaker 1: work for so many people while providing additional guarantees and
Speaker 1: benefits and protections. Well, I'm super grateful to Adrian for
Speaker 1: your time and for your explanation, and I'm sure we'll
Speaker 1: be hearing much more about the story going forward. So
Speaker 1: I really want to thank you for presenting your point
Speaker 1: of view. Thanks No who's right ultimately about the utility
Speaker 1: and value of a B five? After listening to Lorina Gonzalez,
Speaker 1: it's pretty hard not to feel that many drivers who
Speaker 1: make their living driving for Uber or Lift or door
Speaker 1: Dash would have a lot to gain if they were
Speaker 1: actually treated as employees who got benefits on the other hand,
Speaker 1: the Lift spokesman Adrian Durban also makes a plausible case
Speaker 1: that there are people who do not drive full time
Speaker 1: for the companies who might no longer be able to
Speaker 1: enjoy the benefits of a part time gig job. Balancing
Speaker 1: those interests, the interests of the full time drivers against
Speaker 1: those of part time drivers is not a simple matter,
Speaker 1: But that's why we have legislatures. The California legislature has
Speaker 1: passed a law that clearly opts to prefer the full
Speaker 1: time drivers and make sure that they become protected employees
Speaker 1: over the interests of part time drivers. Now, what remains
Speaker 1: to be seen is how the public in California will
Speaker 1: react when it's asked on a ballot initiative whether the
Speaker 1: law should be changed. That's something worth watching closely in
Speaker 1: the future. Not only will it tell us a lot
Speaker 1: about this debate, but it will probably tell us something
Speaker 1: very important about the future of the gig economy nationwide.
Speaker 1: And now are sound of the week. Those are people
Speaker 1: rallying in front of the Supreme Court in Washington, DC
Speaker 1: this week on the occasion of the Justice's consideration of
Speaker 1: the legal future of DHAKA, the deferred Action for childhood
Speaker 1: Arrivals program. You all know that program. DACA was announced
Speaker 1: first under President Barack Obama, and its essential goal was
Speaker 1: to make sure that people who were brought to United
Speaker 1: States as children by parents who might have become undocumented,
Speaker 1: and who themselves became undocumented and therefore unable to stay
Speaker 1: in the country legally would be allowed to remain in
Speaker 1: the country and even allowed to work. Those are the
Speaker 1: people we've come to call dreamers. During President Obama's administration,
Speaker 1: a very similar program to DACA, one that was aimed
Speaker 1: at parents, was challenged in court and ultimately struck down
Speaker 1: by the US Court of Appeals for the Fifth Circuit
Speaker 1: that went to the Supreme Court that time, and the
Speaker 1: Supreme Court split four to four after the untimely death
Speaker 1: of Justice antonin Scalia at the Supreme Court, a tie
Speaker 1: goes to the decision below, So the four to four
Speaker 1: decision left in place the decision that had been made
Speaker 1: by the Court of Appeals striking down the parent version
Speaker 1: of DACA. When Donald Trump became president, he expressed in
Speaker 1: a tweet, of course, that it was a great idea
Speaker 1: for dreamers to be able to stay in the United States. Nevertheless,
Speaker 1: he issued an order putting an end to the DACA program. Why, well,
Speaker 1: his order said the DACA program was unlawful and would
Speaker 1: not be able to be defended in court. Of course, immediately,
Speaker 1: DACA advocates went back to the courts and they challenged
Speaker 1: Donald Trump's suspension of the order. Sure enough, a lower
Speaker 1: court and then a quarter of appeals held that Donald
Speaker 1: Trump was not able to reverse Barack Obama's decision. And
Speaker 1: that's the issue before the Supreme Court. Now, Now, if
Speaker 1: this all sounds legal and confusing, it is, and here's why.
Speaker 1: Logically speaking, what you would expect is that if a
Speaker 1: president like Barack Obama has the power to create a
Speaker 1: program like DOCCA, then the next president, Donald Trump, should
Speaker 1: have the same power to end the program. In order
Speaker 1: to avoid that legal argument, those who supported DOCA told
Speaker 1: the courts that Donald Trump had not done a sufficient
Speaker 1: job of explaining his decision. If they say Trump had
Speaker 1: simply announced that he didn't like the DOCCA program because
Speaker 1: he thought the dreamers shouldn't be able to stay in
Speaker 1: the United States, that would have been permissible. But they
Speaker 1: argued in court because Trump insisted that he had no
Speaker 1: choice but to rescind the program because it violated the law.
Speaker 1: He was stating an untrue fact, because although the Supreme
Speaker 1: Court had indeed said that a similar program that had
Speaker 1: been struck down by the Court of Appeals would remain
Speaker 1: struck down, the Supreme Court had not absolutely foreclosed the
Speaker 1: legality of the DACA program. What will the justices do
Speaker 1: with that ruling? At oral argument, it sure sounded like
Speaker 1: there were five votes to support Donald Trump's decision to
Speaker 1: rescind DACA. Crucially, the four four split that the Court
Speaker 1: had reached in reviewing the Court of Appeals decisions several
Speaker 1: years ago almost certainly included Chief Justice John Roberts on
Speaker 1: the side of the people saying that the parent version
Speaker 1: of DACA was unlawful. We can't say that with one
Speaker 1: hundred percent certainty, because in a four four decision, the
Speaker 1: justices don't necessarily state who voted which way. But it's
Speaker 1: almost certain that the four liberals would have voted to
Speaker 1: say that Barack Obama had the right to shudaka, and
Speaker 1: the four conservatives would have said that he didn't. Consequently,
Speaker 1: Chief Justice Roberts, who is essentially the swing vote these days,
Speaker 1: is basically likely to be the swing vote here, and
Speaker 1: it seems relatively likely that he's going to vote to
Speaker 1: uphold Donald Trump's decision. If the Supreme Court does that,
Speaker 1: it will create a legal situation in which Dreamers will
Speaker 1: actually stand the risk of being deported from the United States.
Speaker 1: Of course, Donald Trump could go easy on enforcement, or
Speaker 1: it's conceivable he could reach some kind of a compromise
Speaker 1: where he allows Dreamers to remain. The difficulty is that
Speaker 1: in an election season, it will be very hard for
Speaker 1: Trump to take a stand other than a strongly anti
Speaker 1: immigrant stand, and at a time when Congress is considering
Speaker 1: his impeachment, it is vanishingly unlikely that he would reach
Speaker 1: a legislative compromise over the question of DHAKA. All this
Speaker 1: means that we're headed for a genuinely sad and worrisome
Speaker 1: moment for Dreamers. Ultimately, their best hope may be that
Speaker 1: Donald Trump is not reelected and that a new president
Speaker 1: readopts some version of DACA. But here's the twist. Depending
Speaker 1: on how the Supreme Court decides this case, it might
Speaker 1: actually imply or even hold that no president has the
Speaker 1: authority to adopt the DCA program at all. The devil
Speaker 1: is in the details. So when the Supreme Court decides
Speaker 1: this case, we're going to have to dig deep read
Speaker 1: the opinion and try to determine whether, under its logic,
Speaker 1: a democratic president in the future could reissue the DOCCA
Speaker 1: program in some new form. I promise you that when
Speaker 1: that happens, you'll hear about it on your Sound of
Speaker 1: the Week. Deep Background is brought to you by Pushkin Industries.
Speaker 1: Our producer is Lydia jenne Hot, with engineering by Jason
Speaker 1: Gambrel and Jason Roskowski. Our showrunner is Sophie mckibbon. Our
Speaker 1: theme music is composed by Luis GERA special thanks to
Speaker 1: the Pushkin Brass, Malcolm Gladwell, Jacob Weisberg, and Mia Lobel.
Speaker 1: I'm Noah Feldman. You can follow me on Twitter at
Speaker 1: Noah R. Feldman. This is Deep Background.