Uber and Lyft to Spend $60 Million to Maintain California Driver Status

SAN FRANCISCO — A bill in California’s legislature could soon force ride-hailing companies like Uber and Lyft to treat their drivers like employees instead of independent contractors.

But Uber and Lyft, which contend that changing the legal status of their drivers represents a fundamental threat to their businesses, said Thursday that they will spend $60 million on a ballot initiative that would essentially exempt them from the proposed law.

Drivers for Uber and Lyft work as independent contractors, logging into the companies’ apps and providing rides whenever they choose. They have no legally protected minimum wage, guaranteed sick days or traditional health benefits.

The drivers have routinely complained that the companies can cut their earnings without explanation and that they have no recourse if they are kicked off the apps.

As the bill that could give drivers employment status, Assembly Bill 5, winds its way through California’s legislature, Uber and Lyft have urged lawmakers to strike a deal with them that would allow them to continue to treat drivers as independent contractors.

But the bill’s sponsor, Lorena Gonzalez, a Democratic member of the State Assembly from San Diego, has said she does not foresee a compromise with the ride-hailing companies.

California’s current legislative session ends in mid-September, and vote on the bill is expected before the session ends. That means time is running out for Uber and Lyft to strike a bargain.

The companies said their proposed ballot initiative would preserve drivers’ ability to set their own schedules, while Uber and Lyft would offer a concession on minimum wage standards, health benefits and collective bargaining rights.

In an email to drivers that urged them to contact their local lawmakers, Uber said it would guarantee a minimum wage of $21 dollars per hour while a driver has a passenger or is on the way to pick one up.

Uber and Lyft said they will each give $30 million to support their proposition effort. The ride-hailing companies said their initiative, which has not yet been drafted, would preserve those wage concessions.

“As a Plan B, we are reluctantly funding this initiative,” Tony West, Uber’s chief legal officer, said in an interview. “This is not our first choice option. We would much rather have an historic deal that is good for drivers, good for innovation, good for labor.”

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While officials at Lyft still believe they can strike a deal with state officials, they said they are willing to bring the issue directly to voters.

“We are working on a solution that provides drivers with strong protections that include an earnings guarantee, a system of worker-directed portable benefits, and first-of-its kind industrywide sectoral bargaining, without jeopardizing the flexibility drivers tell us they value so much,” said Adrian Durbin, a Lyft spokesman.

If Assembly Bill 5 becomes law, Uber will continue to litigate employment claims with its drivers, Mr. West said. “Just as we have done for the last decade, we will litigate these cases,” he said.

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