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Uber will not 'automatically' reclassify drivers as employees, legal chief says

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Uber will not 'automatically' reclassify drivers as employees, legal chief says

Uber Technologies Inc.'s chief legal officer said the recently approved bill in California will not force the ride-hailing platform to reclassify its drivers as employees.

Tony West argued Sept. 11 that Assembly Bill 5, or AB5, does not "automatically reclassify any rideshare drivers from independent contractors to employees." California Gov. Gavin Newsom signed the bill into law, which will take effect January 2020, does not provide drivers with benefits or give them the right to organize.

AB5 instead inserts into the California labor code a legal test that would determine whether a worker is an independent contractor or not, the executive said.

The test, known as the "ABC" test, is the result of the California Supreme Court's decision that an employee of courier services provider Dynamex Operations West was properly classified as an independent contractor rather than as an employee. It requires companies to establish that a worker is free from its control and direction and is involved in independent work of the same nature.

Another part of the test is having to prove that a contractor does work "outside the usual course" of a company's business.

Uber noted that it mainly serves "as a technology platform for several different types of digital marketplaces," rendering the work of its drivers as falling outside the normal course of the company's business, citing previous rulings.

The company also pointed out that "many" of its drivers work for its competitors, as 92% of them log less than 40 hours a week, with less than half of them driving 10 hours weekly. "This would all change dramatically if they were employees," West warned.

"Because we continue to believe drivers are properly classified as independent, and because we'll continue to be responsive to what the vast majority of drivers tell us they want most — flexibility — drivers will not be automatically reclassified as employees, even after January of next year," West said. He added that Uber expects to continue responding to misclassification claims.

As an alternative, Uber is offering to establish a guaranteed minimum earnings standard for its drivers to provide them with benefits like sick leave and injury protection as well as to have real sectoral bargaining.

The legal chief said Uber will continue to work on a compromise with Newsom regarding the matter. However, it is also pursuing several legal and political options. These include its team-up with Lyft Inc. and food delivery platform DoorDash Inc. to hold a ballot initiative across the state of California if talks between unions and lawmakers fall through.

West added that Uber will not ask voters to exempt the company from AB5. It will ask them "to support the pro-driver policies we have advocated for: giving drivers access to benefits and an earnings floor and retaining the flexible access to on-demand work they enjoy today."