The California Public Utilities Commission (CPUC) issued an order finding that gig economy workers, including Uber and Lyft drivers, are employees under California’s new AB 5 law. The CPUC regulates ride-hailing companies across California. This decision comes after the new law went into effect in January. The law is designed to crack down on worker misclassification by making it harder for companies to classify workers as independent contractors instead of employees.
Certain criteria must be met for a worker to be classified as an independent contractor. As an independent contractor, companies do not have to pay for overtime, healthcare, and other benefits. The CPUC stated that it needed to enforce the state law, stating that drivers for transportation network companies (TNCs) are considered employees and it would be upholding this in the future.
California’s worker classification has been a highly debated topic. In May California sued Uber and Lyft over driver misclassification. Uber and Lyft have secured a ballot measure for the November election to exempt app-based drivers from AB 5. Drivers for the ride-hailing companies, as well as Uber and Lyft filed a suit, against AB 5, but ultimately lost the preliminary injunction. The CPUC states that the lawsuits and ballot measure highlights the importance of this issue and the need for the Commission to regulate and maintain oversight over the TNCs.
The CPUC stated that “for now, TNC drivers are presumed to be employees and the Commission must ensure that TNCs comply with those requirements that are applicable to the employees of an entity subject to the Commission’s jurisdiction.”
The CPUC noted that its decision will remain in place until “a higher court, the legislature, or the public through their right to vote, determine otherwise.” It seems that we will have to wait until November to see how the public feels about worker classification.
In its order the CPUC also addresses rules for TNC regarding sexual assault and harassment, and clarifies the scope for transporting minors, data collection and sharing.