Uber and Lyft are putting $60 million toward keeping drivers independent contractors

In light of gig worker protection legislation Assembly Bill 5 making its way through California’s legislature, Uber and Lyft are amping up their efforts to do whatever they can to prevent it from happening. And in the event that the bill does pass, which would force Uber and Lyft to make their drivers W-2 employees, both companies are each putting in $30 million to fund a ballot initiative that would enable them to keep their drivers as independent contractors, The New York Times first reported.

Right now, it’s just Uber and Lyft on board, but there are talks of other companies joining. The ballot initiative, while not set in stone, would enable companies to provide workers benefits, establish wage commitments and guarantees, offer flexibility and establish that drivers are not employees, an Uber spokesperson told TechCrunch.

“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 industry-wide sectoral bargaining, without jeopardizing the flexibility drivers tell us they value so much,” a Lyft spokesperson told TechCrunch. “We remain focused on reaching a deal, and are confident about bringing this issue to the voters if necessary.”

The formation of the campaign committee comes shortly after Uber and Lyft urged drivers and passengers to contact their legislators. In Uber’s email, the company advocated for a policy that would offer drivers a minimum of $21 per hour while on a trip, paid time off, sick leave and compensation if they are injured while driving, as well as a collective voice and “the ability to influence decisions about their work.”

Similarly, Lyft is proposing a minimum of $21 per booked hour, meaning while either driving to pick someone up or dropping them off. Called a Rideshare Drivers Benefit Fund, Lyft says that could include injured worker protections for all drivers across California, paid sick leave and paid family leave for drivers who spend 20 hours or more per week in booked rides.

Gig Workers Rising, one of the organizations responsible for bringing drivers together to support AB-5 and demand the right to unionize, said it’s no coincidence that on the last day of a statewide action demanding AB-5 and a union that Uber and Lyft would begin circulating these messages to drivers and passengers.

“Everything that Uber and Lyft are offering is insulting to drivers,” Lauren Casey of Gig Workers Rising told TechCrunch earlier today regarding the messages Uber and Lyft sent out yesterday. “This is nothing new. All they’ve done since AB-5 was introduced is spread misinformation and fear. This shows us that Uber and Lyft are worried. Drivers have been organizing and fighting hard for AB-5 for months, and, it’s working.”

AB-5 seeks to codify the ruling established in Dynamex Operations West, Inc. v Superior Court of Los Angeles. In that case, the court applied the ABC test and decided Dynamex wrongfully classified its workers as independent contractors based on the presumption that “a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits…”

According to the ABC test, in order for a hiring entity to legally classify a worker as an independent contractor, it must prove the worker is free from the control and direction of the hiring entity, performs work outside the scope of the entity’s business and is regularly engaged in an “independently established trade, occupation, or business of the same nature as the work performed.”

In short, AB-5, which has already passed in the California State Assembly, would ensure gig economy workers are entitled to minimum wage, workers’ compensation and other benefits. That would mean major changes in both Uber and Lyft’s business models and bottom lines.