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Drivers balk at Uber’s AB 5 fixes. Courts may, too.
Some experts say Uber may have as much luck satisfying California law as drivers are having boosting rates.
Victor, an Uber driver in a Camry, sat in a parking lot at Sacramento International Airport and tested out a new feature on the app, one that the company hopes will allow it to avoid having to hire people like him as employees in California.
He set his price at 1.2 times the normal fare. Then he waited. For the next 45 minutes, Victor did not get a notification on his phone about a possible rider — until he reversed course and asked for the normal rate.
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"The way the Sacramento market is, it's not gonna work," said Victor, who, like other drivers interviewed at the airport last week, asked that his last name be withheld because he didn't want to risk being deactivated by Uber. He said there were too many drivers in the area, while gesturing toward two or three dozen Uber and Lyft drivers waiting in the lot that afternoon. "Before, I used to make $100 before noon. Now I'll be lucky if I make that in eight hours."
At the beginning of the year, Uber told California customers they would see a range of prices instead of a set rate when they summoned a ride, with the final fare determined by time and distance. In addition, drivers can view details about trips in advance — including if they're short trips with low payouts — and reject them. Riders can also designate drivers as favorites and will soon be able to request them.
Perhaps most significantly, the Sacramento airport is one of three locations in California where, since Jan. 21, Uber has been letting drivers set their own rates in relation to the starting point set by the company. The other two are the airports in Palm Springs and Santa Barbara.
Uber said it's making the changes to give drivers control over their working conditions as it tries to fight Assembly Bill 5, a landmark state law that went into effect Jan. 1 and restricts companies' ability to designate workers as independent contractors rather than employees. But some experts think Uber will have about as much luck convincing courts it is therefore in compliance with the law as Victor had in boosting his rate.
"Uber is still in the ride and delivery business," said Catherine Fisk, a professor at UC Berkeley School of Law who teaches and writes about labor and employment law. "Drivers are still core to what it does — indeed, they're just about all it does except manage the software that enables" its services.
AB 5, passed last year, could be devastating to Uber's business model, which relies on independent-contractor drivers who are not entitled to a minimum wage or health benefits. A Barclays analysis found that hiring employee drivers in California could cost Uber $500 million a year and Lyft $290 million. Uber, Lyft and DoorDash have put $90 million into a campaign to put the issue before the state's voters in November.
AB 5 codifies a 2018 California Supreme Court decision that adopted an "ABC" test for determining when a worker must be considered an employee. They can be considered contractors only if they control their work, if their duties are outside of what the business normally does, and if they are "customarily engaged in an independently established trade, occupation or business."
Giving drivers more say over the price of rides is seen as Uber's attempt to comply with the "A" element of the test.
"I think they recognized that winning on 'A' was a long shot," said William Gould, an emeritus professor at Stanford Law School and a former chief of the National Labor Relations Board. He noted that Uber continues to have plenty of control over drivers' work: "They determine the driver's qualifications. They decide who will be retained. They have rules relating to how the car is to function and the appearance of the automobile."
Fisk agreed that even if Uber drivers were deemed to have control over their work, the company would likely still "flunk" the second element of the test, holding that workers can be considered contractors if they perform tasks not central to the company's business. Gould added: "They've still got 'B' staring them in the face. Don't forget … if you fail under any one of the standards, you're an employee."
An Uber spokesman, Davis White, said the changes the company is making are "about giving drivers more information, transparency and control over how they earn." Although he said the company is confident it can pass the ABC test, "You always want to give yourself the strongest argument possible."
The company told drivers in its announcements in early January: "We're going to build more products that help you grow your business with Uber."
The ballot measure Uber and others are backing proposes a minimum wage for ride-hailing and delivery drivers, a stipend for health care, a workers' compensation equivalent, and more. Essentially, gig-economy companies are asking for an industry-specific worker classification that allows them to avoid taking on employees.
Lyft has not announced public-facing changes in response to AB 5, and a spokesman said the company would have no comment on Uber's recent moves.
Erica Mighetto, a Lyft driver in the Bay Area and an organizer for Gig Workers Rising, which backed AB 5, said some riders have told her they switched from Uber to Lyft because they preferred knowing a set price for their rides — an early advantage that both ride-hailing companies had over taxis.
"Lyft is profiting off doing nothing," she said of Uber's changes.
As drivers negotiate the changes to the app, some are looking to a provision in AB 5 that gives cities with a population of 750,000 or more the ability to seek a court injunction against companies that don't comply. On Wednesday, drivers plan to file wage-claim actions in San Francisco, Los Angeles and San Diego.
When asked about their experience with the tweaks in the app, several Uber drivers said they had the same experience as Victor's and had been unable to take advantage of their ability to raise rates. They said the app was not yet allowing them to lower rates, but when that happened, they expected to be undercut by other drivers.
In Sacramento that day, the rate for a ride in a regular car — not a premium vehicle — was 78 cents a mile.
"Corporations always turn employees against each other," Victor said.
A driver named Paul, who was also in the airport lot off Crossfield Drive, said he had gotten about 25% fewer rides since Uber rolled out its changes. He and others said the one change they liked was the freedom to decline a ride they checked out and didn't think was worth accepting.
But they said Uber also took away their ability to track their place in the drivers' queue at the airport. They couldn't see if they had two drivers — or 30 — ahead of them, and thus didn't know how long they should hang around, or whether they should try to find rides elsewhere.
"They need to come out and see how it's affecting drivers on the ground," Paul said.
Another driver, Aaron, said the rate-setting hadn't worked for him, either. There was talk of drivers banding together and raising their rates at the same time, but without success.
"I talked to people [who said] why don't we go to 1.5" times the normal rate, Aaron said. "The problem is everyone is different. They're from different countries, they're full or part time. It's hard to get it together."
Last Friday, Mighetto, the Gig Workers Rising organizer, urged drivers at the airport to raise their rates in unison to three times the normal rate. Some did, she said, but they waited for hours and failed to attract rides. Other drivers tried to "sabotage" the action, she said, by telling their peers not to raise rates and by calling airport security on Mighetto as she passed out fliers.
Aaron expressed frustration about all the changes. For example, drivers used to get bonuses for completing certain types of rides consecutively, but that incentive is gone, he said. "Once we figure something out," he said, "they change it."
Still, Uber would have to give up a lot more control over its drivers' duties before it could pass the "A" prong of the California test, said Beth Ross, a Bay Area-based labor attorney. "I don't think they've gone far enough," she said.
Though price-setting hadn't worked for Victor, he gave credit to AB 5 for prompting Uber to make the change that allowed drivers to see their riders' destinations beforehand. He pointed out that Uber touts drivers' flexibility — the ability to work when they want — as an argument they should be classified as independent contractors.
"But," he added, "you could be an employee under the law and work when you want."
Levi Sumagaysay (@levisu) is a former Silicon Valley reporter at Protocol. Previously, she was a tech reporter at The San Jose Mercury News, where she covered everything from artificial intelligence to IPOs, tech culture, news about big tech, and more. Levi has edited or written technology news since the first dot-com boom, and was for a time the writer of Good Morning Silicon Valley, one of the earliest tech blogs/newsletters.