Tampa, FL (WorkersCompensation.com) – It is no secret that California law could make Uber’s business harder to operate. The California legislature passed AB5, a law which attempts to reclassify some workers as employees when they have usually been considered independent contractors. In response to this law, Uber is attempting to change its practices to keep drivers as independent contractors.
Now, in California, customers would be given estimates on what rides would cost instead of fixed prices. Final prices will be calculated at the end of the trip based on factors such as time and distance.
“Due to a new state law, we are making some changes to help ensure that Uber remains a dependable source of flexible work for California drivers,” Uber said in a statement. The statement demonstrates that the policy change was in a direct response to the new California’s law.
Uber is a side job for many people who are looking to make extra money who otherwise may not be hired as employees. If Uber drivers were considered employees, then they may have to be provided with many more costly benefits such as workers’ compensation, as well as health care, FMLA, paid leave, unemployment benefits, etc.
California uses the ABC test to determine if a worker is an employee or independent contractor:
- The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
- The worker performs work that is outside the usual course of the hiring entity’s business; and
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Some believe that the California legislature passed the new law, which some say is not friendly to the gig-economy, in response to interest groups such as the taxi driving industry which has seen a large loss of business due to companies like Uber, DoorDash, and Lyft. Uber and other companies are actively litigating the law in court asking that it be blocked from going into effect.
Uber has made the argument that the new law does not apply to its drivers. Uber and other companies have also made the argument that if the new law were to apply to them it would make Uber rides more expensive and the consumer would suffer.
Some of these changes will likely be favorable to consumers who should be getting more information about their trips ahead of time. They should be able to see the estimated cost of the ride, the time the trip will take and any stops along the way.
The company is working to change the benefits offered to California customers while taking away benefits like Uber Rewards or price protection. The company appears to be taking away things which the opposition could argue that make the Uber drivers employees rather than independent contractors.