- This is probably the beginning
of a really long, challenging time
for both Uber, Lyft, Postmates, DoorDash,
and a lot of companies in the sharing economy space.
- It almost seems to me like they're digging
their heels into a business model
that is, in and of itself, never going to work.
- You're alone (chuckles) in your car,
and this massive technological operation
is just sucking the revenue out of you and leaves you
to deal with all the rest of it by yourself.
- This notion of, "I wanna be paid really high salaries,
"I wanna be guaranteed all of my income,
"whether the demand is there or not,"
that's not how capitalism works!
(cars honking)
- [Narrator] The gig economy, the sharing economy,
the future of work, whatever you call it,
contract work may be changing, for both the workers
and the tech companies that rely on it.
California just passed Assembly Bill 5,
a law that could completely abandon the gig economy
by reclassifying many independent contractors as employees,
a huge step towards a new labor model across the country.
Hundreds of thousands of contract workers
in California are set to become employees,
threatening the business models of ride-hailing companies
like Uber and Lyft, and a host of other companies.
Veena Dubal is a labor law professor
at the University of California, Hastings
who's studied the taxi industry
and the gig economy for over a decade.
- In the first years of the gig economy,
things were okay, but over the last five years,
they've lowered income for drivers.
These companies unilaterally set prices,
and they unilaterally drop prices,
and they unilaterally decide that drivers are gonna
make even less of the fare that they were before.
- [Narrator] Under the new law, drivers could be entitled
to benefits like a minimum hourly wage
and workers' compensation,
but the question for workers is,
will those benefits come at the cost of flexibility?
Will part-time jobbers be forced to become employees
and start working scheduled shifts?
While some Uber and Lyft drivers fear
they could lose flexibility as an employee,
others like Edan Alva welcome the protections.
Alva moved to the U.S. from Israel almost 20 years ago
and worked as a corporate security manager in the Bay Area.
He started driving for Lyft part time 4 1/2 years ago
to make a little extra money on his long commute.
Then he lost his job and was forced to start driving
full time to support himself and his son.
He currently drives for Lyft and Zum, a rideshare
specifically to take children to and from school.
- My rates today are about half
of what they were when I started four years ago.
Every day feels like a Russian roulette, (chuckles)
because the chances of something happening,
maybe something small and annoying, like another flat tire,
maybe something bigger like a car accident,
maybe something devastating like getting injured,
in a way that I cannot work, it's all there.
And if that happens, I have no safety network!
- [Narrator] AB5 will require companies that want to treat
a worker as a contractor to prove three things,
that the worker isn't controlled by the company,
that the work isn't part of the company's core business,
and that the worker has their own independent enterprise.
Uber and Lyft told us this could force them
to raise costs and wait times for riders
and significantly reduce the amount of drivers they employ.
Lyft also told drivers in a message
that they may soon be required to drive
specific shifts, stick to specific areas,
and drive for only a single platform.
Uber said it plans a legal challenge,
arguing that drivers are not part of their core business.
Bradley Tusk was an early investor
and consultant for Uber who helped the company
successfully oppose the minimum pay
and other ride-hailing rules in New York.
- When I was investing in and working with Uber
back in the early days, it was envisioned
as something that people would do
in their spare time to make a few extra bucks,
not as their full-time living.
There are a subset of drivers in some really big cities
where it very much is their full-time job,
and so it's problematic 'cause it's expensive,
it's problematic because fundamentally,
the business wasn't designed for that.
- [Narrator] The two companies say they have more
than half a million combined drivers in California,
and that the majority of them drive
less than 20 hours a week.
They say that drivers take home more than 70% of fares,
but economists have estimated,
Uber and Lyft drivers earn on average between nine
and $16 an hour, after accounting for gas, maintenance,
and other expenses the contractors are responsible for.
Many part-time drivers fear AB5 could make it worse,
and by forcing them to drive scheduled shifts,
it would wipe out the flexibility they need.
Alva recently started organizing Lyft and Uber drivers,
has been active at demonstrations in support of AB5.
He often talks to drivers while waiting for rides
in the parking lots at the airport.
- Currently, in the San Francisco Airport,
there are 216 drivers who are just waiting
in their car for a ride.
All these drivers are waiting here.
Nobody is paying them for their time, and they will wait
until they will get a ride from the airport.
Sometimes it can take 15 minutes,
sometimes it can take 30, an hour, or more.
- [Narrator] It's unclear how the bill will be enforced
once it's enacted in January, but Uber, Lyft,
and DoorDash have already pledged to combine $90 million
for a ballot measure campaign to alter the law.
- Just a few months from now, in January 2020,
most state legislative sessions will begin again,
and it will be hard to not see 10 to 15 states
take this issue up, so it's a domino effect,
and one thing Uber and Lyft and the others
really need to do is try to overturn
the California legislation as quickly as possible.
- The reason that it's so incredibly important
is because if we hadn't put the brakes
on this business model,
what is to have prevented all other service work
from going down this road?
- When you look at the broader picture,
any industry can be put on an app,
and the question is,
is that a real reason
for people to not have workers' rights?
(subdued music)