Gig economy companies like Uber and Lyft have had meteoric success in capturing large market shares thanks to the great value and ease of use they provide their customers. But how do they keep their prices so low? In large part, it’s because most of their workers are technically considered independent contractors. However, a new California Assembly Bill aims to force companies to classify independent contractors who meet certain qualifications as employees.
The advantages of independent contractors
Using a workforce of independent contractors allows large companies to skirt minimum wage laws and avoid providing any benefits—like health care or paid sick leave—for their employees. On top of that, gig economy workers are responsible for paying for all of their equipment and upkeep. For Uber drivers, that means a relatively new car and frequently expensive repairs. According to The New Republic, some Uber drivers make as little as $3.75 an hour.
Workers’ compensation in the gig economy
In addition to avoiding requirements for health care, paid sick leave, and minimum wage, gig economy companies are not required to take out workers’ compensation insurance for their independent contractors. While Uber offers drivers the ability to buy into an insurance program, this still leaves employees out in the cold when it comes to getting hurt on the job.
Unsurprisingly, companies like Uber and Lyft are fighting these new regulations hard. Since their business model is constructed on cheap labor, they have been setting up rallies and lobbying politicians to prevent the passage of the law. If the bill passes, they will almost certainly challenge it in court.
Holding businesses accountable
Every employee deserves the right to a safe workplace and fair pay under the law. At Accident Recovery Legal Center, we have been protecting the rights of San Jose and Salinas employees since 1984. If you’ve been hurt on the job or believe your employee has violated your rights as a worker, call 1-888-931-WORK (9675) today to schedule a free initial consultation with an experienced workers’ compensation attorney.