Assembly Bill 5 (AB5) was only on the statute book for 41 days and not yet in force when Uber, Lyft, and DoorDash introduced a ballot measure asking Californians to exempt them from this key piece of state employment legislation. The initiative known as Proposition 22 will be put to voters on 3 November 2020 against the backdrop of a global pandemic that has hit essential gig workers hard. It’s not like the plight of workers is of any consequence to the Prop 22 backers though. At the peak of the COVID-19 public health crisis and facing legal pressure to implement AB5, Uber and Lyft threatened a capital strike instead of re-classifying their drivers as employees and providing basic labour protections. Over the past year, the tactics of the $185 million Yes on Prop 22 campaign has seen Uber and the other ballot sponsors flout numerous internationally-accepted business and human rights principles in their pursuit of special status in California – a perfect case study on irresponsible business conduct.

AB5 is ground-breaking because it codifies the employment status test from the landmark California Supreme Court case Dynamex, which effectively makes it harder to misclassify workers as self-employed independent contractors. The so-called ABC test creates a statutory presumption that all workers, including platform workers, will qualify for employment rights unless their employer can demonstrate that they are genuinely self-employed. Crucially, the burden of proof lies with the employer, thereby protecting the weaker party in the relationship.

Unlike Dynamex, which only applies to wage orders, the AB5 employment test applies across the full spectrum of California’s labour laws. This relatively simple test guards against digital labour platforms resorting in “documentation to fictions, twisted language and even brand new terminology” to avoid creating an employment relationship. This is why AB5 has supporters around the world; it directly challenges the business model of platform companies founded on misclassification. 

Employment status is critical from a human rights perspective because the employment contract remains the cornerstone of labour regulation. In California as in other parts of the world the proper classification of workers determines the workplace protections an individual is entitled to. These include minimum pay, sick pay, overtime pay and paid leave. Employment status also determines the nature of collective labour rights available to a worker. Non-payment of employer social security and tax contributions also deprives state coffers of much needed funds to support public services, including affordable urban transport.

According to industry executives, classifying gig workers as employees could cost digital labour platforms an average of 20 to 30% more. It is therefore no surprise that platform companies want to repeal AB5. The correct classification of drivers destroys their business model based on enjoying profits without taking responsibility for labour protections. Uber, the leading ride-hail operator worldwide, even cited regulatory efforts to classify ride-hail drivers as employees as a risk factor in its IPO prospectus.

Uber has been waging regulatory warfare across the world to protect its exploitative business model. However, courts and regulators are increasingly seeing right through the company’s partner agreements and concluding that Uber drivers are not self-employed contractors. In this context, the regulatory battle in one of Uber and Lyft’s biggest markets represents a watershed moment in gig economy regulation.

RBC necessarily entails compliance with the UN Guiding Principles on Business and Human Rights (UNGPs), which represent the internationally accepted standard for preventing and addressing the risk of adverse impacts on human rights linked to business activity. One of the three pillars of the UNGPs is the responsibility of companies to respect internationally recognised human rights, including those expressed in the International Bill of Human Rights and the International Labour Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work. Taken together, this normative framework embodies numerous individual and collective labour rights, such as freedom of association and collective bargaining, equality and non-discrimination, wages, health and safety, social security, and working time limits.

Since their adoption, the UNGPs have also been incorporated into the two leading instruments on transnational companies and human rights, namely the Organisation for Economic Co-operation and Development’s (OECD) Guidelines for Multinational Enterprises and the ILO Multinational Enterprises Declaration. These best practice principles are now the expected norm of business enterprises and the requirement to comply with these standards is being increasingly reflected in commercial contracts and investment criteria.

Since many internationally recognised human rights apply to workers only when they are legally classified as employees, misclassification results in a direct breach of workers’ rights resulting in poor pay, labour exploitation, and precarity. Not to mention the fact that this phenomenon can uniquely affect ethnic minority workers because they make up the majority of ride-hailing companies’ workforces in places like California. From a collective labour law perspective, misclassification also heavily curtails the enabling human rights to freedom of association and collective bargaining. These adverse impacts have been on full display during the pandemic with gig workers finding themselves in a social security vacuum and without basic labour rights. In Brazil, where the local Uber subsidiary is a member of the UN Global Compact, courts had to compel both Uber and UberEats to pay the hourly minimum wage and provide personal protective equipment to their drivers and riders.

The knowledge that disguised forms of employment create a human rights abyss for workers should put gig companies on notice to classify their workers properly – an obligation Uber, Lyft, and DoorDash have failed to discharge.

The OECD MNE Guidelines, which apply to each of the Prop 22 backers, explicitly require enterprises to structure their relationships with workers so as to avoid supporting, encouraging or participating in disguised employment practices in line with ILO Recommendation 198 on the Employment Relationship. Uber, Lyft, and DoorDash have based their entire business model on disguised employment and are therefore in clear breach of the OECD MNE Guidelines. Uber, for example, makes no secret of this. CEO Dara Khosrowshahi has openly admitted that independent contractors in the United States have “almost no safety net”.

Looking at the Prop 22 ballot initiative itself, the OECD MNE Guidelines expect enterprises to refrain from seeking exemptions in the statutory framework related to human rights and labour. Uber, Lyft and Doordash are doing the exact opposite by going directly to voters to acquire exemptions from labour regulation. Worse yet, Prop 22 would codify a third regulatory framework for gig workers in California between employees and independent contractors. In practice, this would have the effect of denying a majority ethnic minority workforce basic rights and protections. Among other things, workers stand to make far less under Prop 22 than employees do under AB5 while at the same time not being able to enjoy the ability to set rates that genuine self-employed workers have. Further, Prop 22 also fails to protect against discrimination on several grounds, including immigration status. 

While it is evident that the substance of Prop 22 is problematic from an RBC standpoint, the tactics of the Yes on Prop 22 campaign also merit a thorough examination from a human rights perspective. A classic method of avoiding responsibility for human rights violations is to deliberately mislead stakeholders – in this case gig workers and clients of the platforms. The Yes on Prop 22 campaign has done this to good effect by selling the myth that employment status upends gig worker schedule flexibility, i.e. a worker’s ability to choose when they work. This theory can of course be debunked in numerous ways. Simply put, a finding of employment status does not preclude flexible work schedules, but these gig companies continue to promote this false dichotomy supported by pseudo-research.

Another tactic adopted by the Yes on Prop 22 campaign is the use of social media to undermine critics, labour rights advocates and human rights defenders. In a brazen attempt to silence one of the most outspoken critics of Prop 22, the campaign instigated an ugly operation to denigrate and harass Professor Veena Dubal of the University of California’s Hastings College of Law. As Professor Dubal suggests, Uber and Lyft took a page right out of big tobacco’s playbook. This is such an apt parallel because the toxic lobbying of tobacco companies led to the inclusion of an article in the WHO Framework Convention on Tobacco Control requiring States to prevent corporate capture by the industry. Perhaps it is time for digital labour platforms to be regulated in the same way.

There is no doubt that Prop 22 amounts to corporate capture. If it passes, state lawmakers can only reverse the law if the change is consistent with the drafters of the initiative and then only if an astronomical 7/8 of California’s legislature agrees. Uber, Lyft and DoorDash have not even tried to tread carefully. They have breached numerous integrity in lobbying principles with wanton disregard for their RBC obligations. Uber has also been active in Washington DC with Dara Khosrowshahi famously writing a letter to the President requesting labour law reforms in the form of a new category of worker, which would help entrench disguised forms of employment even further while not giving workers basic rights and protections. Even if corporate speech is protected under the US Constitution, RBC principles dictate that enterprises should abide by higher international standards that do not put them in conflict with national law. The Prop 22 backers have done nothing of the sort.

Prop 22 represents the worst of corporate greed at a time when a new social contract is required to enable a sustainable post-pandemic recovery. From misclassifying workers and seeking exemptions from labour laws to engaging in corporate capture and online harassment campaigns, Uber, Lyft and DoorDash have demonstrated their complete disregard for internationally-accepted RBC principles. This is precisely why it is imperative that AB5 remains on the statute book and is effectively enforced without allowing for the use of creative workarounds. AB5 was the first piece of legislation globally to send a message to digital labour platforms that they do not deserve or require special treatment. The world desperately needs international rules based on AB5, which would positively impact on the lives of millions of transport and other workers while dismantling a business model built on exploitation and poor labour standards.

On 3 November 2020, say no to Prop 22. Then let’s take AB5 global.

Ruwan Subasinghe is Legal Director at the International Transport Workers’ Federation (ITF), a global trade union body representing over 18.5 million workers in 147 countries. He specialises in labour, human rights, and international law. Ruwan represents the ITF at external bodies, including the International Labour Organization (ILO) and the Organization for Economic Co-operation and Development (OECD). He is frequently called up as an expert on international labour standards and, among other things, guest lectures at the International Training Centre of the ILO. Ruwan sits on the Advisory Board of the International Lawyers Assisting Workers (ILAW) Network and the Board of the Ethical Trading Initiative (ETI). Prior to joining the ITF, Ruwan practised at an international law firm based in London. He holds a Bachelor of Laws Degree from the University of Durham and a Master’s Degree in Industrial Relations from the London School of Economics and Political Science. The author writes here in a personal capacity.