Uber and Lyft pledge $60m to ensure drivers don’t become employees

30 Aug 2019

A person using the Uber app on their mobile. Image: makidotvn/Depositphotos

California politician Lorena Gonzalez criticised the companies for pledging tens of millions of dollars when they previously claimed they could not pay drivers minimum wage.

On Thursday (29 August), Uber and Lyft took a significant step to ensure that drivers using the platforms would remain as contractors, rather than become recognised as employees.

The companies pledged $60m to fight the introduction of Assembly Bill 5 (AB-5), which passed through the California assembly in May and is due to reach California senate before the end of September.

The bill would classify ride-hail drivers for Uber, Lyft and similar companies as employees. This means that the workers would be entitled to better wages, benefits, health insurance, social security, paid sick days and overtime.


Lyft and Uber have voiced their opposition to the bill, circulating online petitions to have it shot down.

Lyft’s petition read: “AB-5 may lead to hundreds of thousands of California Lyft drivers out of work. As a result, passengers could wait longer for rides or risk losing reliable access to ride-share altogether.”

Similarly, Uber said: “Forcing all drivers to become employees could drastically change the ride-share experience as you’ve come to know it, and would limit Uber’s ability to connect you with the dependable rides you’ve come to expect.”

Drivers working for these companies, on the other hand, have welcomed the bill. Lyft and Uber drivers say that they have lower pay, higher costs and longer working hours since joining the companies.

Coral Itzcalli, a spokesperson for the Mobile Workers Alliance, was unimpressed with the petitions launched by Lyft and Uber.

In a statement to CNet, she said: “Both of these companies are doing what looks like a very desperate last-ditch effort to try get their customer base to go against drivers’ rights.

“The scheme of independent contractors is what companies have used for decades. What it does is saddle the cost of the business on the average worker.”

Ballot initiative

The New York Times was first to report that Uber and Lyft had plans to spend $60m on a ballot initiative that would exempt them from the proposed law. Food delivery service DoorDash then chimed in, offering to contribute $30m to the fund.

As part of its petition, Uber proposed a policy that would offer minimum wage of $21 per hour for contracted drivers that have a passenger or are on the way to pick one up.

The companies also said they would push for “sectoral bargaining”, which they claim would enable drivers to band together in labour negotiations. As pointed out by The New York Times, this style of bargaining is not the same as the typical model of union negotiations.

The bill’s sponsor, Lorena Gonzalez of the California assembly, said that she does not want to forge a deal with the companies.

On Twitter, Gonzalez wrote: “Billionaires who say they can’t pay minimum wages to their workers say they will spend tens of millions to avoid labour laws. Just pay your damn workers!”

Gig Workers Rising, an organisation that also supports the bill, told TechCrunch: “Everything that Uber and Lyft are offering is insulting to drivers. This is nothing new.

“All they’ve done since AB-5 was introduced is spread misinformation and fear. This shows that Uber and Lyft are worried. Drivers have been organising and fighting hard for AB-5 for months, and it’s working.”

A person using the Uber app on their mobile. Image: makidotvn/Depositphotos

Kelly Earley was a journalist with Silicon Republic