Next summer, a federal court in California will hear arguments in a lawsuit that could change Uber forever. The lawsuit challenges the way Uber and other so-called transportation network companies classify their drivers as independent contractors rather than employees. But if that case goes poorly for Uber, the ride-hailing company already has a fallback plan: the states.
State governments in Ohio and Florida are considering bills that would statutorily define Uber drivers as independent contractors and not employees entitled to certain benefits and protections, like medical insurance and wage guarantees. They join three other states — Arkansas, North Carolina, and Indiana — that have successfully passed bills classifying drivers for transportation network companies like Uber and Lyft as contractors, according to Reuters.
For Uber, independent contractors is bae
Uber tells Reuters it supports all five bills. One Ohio lawmaker said five Uber lobbyists met with insurance industry reps to hammer out details on the bill. (Two must have stayed home, because Uber has seven lobbyists on retainer in the state.) He also says Uber and Lyft had a hand in drafting the bill.
As a tactic, Uber sends draft bills to state legislators as examples of regulations they wouldn't mind so much. Indiana's is one such bill that is currently making the rounds in New York's state capitol, where a proposal to regulate TNCs statewide is currently pending.
Whether this helps Uber avoid the fallout from the California lawsuit remains to be seen. It's no question the case poses an existential threat to Uber. The company has argued that it is a technology platform that connects drivers to riders, not an employer in the traditional sense. But many drivers, including the three that brought the lawsuit, say Uber and other TNCs like Lyft control almost every aspect of a driver's experience, from fares to performance standards.
Ohio is looking good for Uber. Florida, not so much
Two former aides to President Barack Obama published a report this week that argues gig economy workers deserve more protections and the right to collectively bargain, while also agreeing that forcing companies like Uber to treat their drivers like full-time employees could put them out of business. Meanwhile, drivers in other states are publicly calling Uber out for popularizing a labor model that denies them the ability to make a good living.
While Uber is pouring money into fighting the lawsuit, it is also spending furiously on lobbying state governments to pass friendly legislation. (Recently valued at $62.5 billion, Uber can afford the lobbying expenditures.) And as of this year, many of those bills have begun to include language defining drivers explicitly as non-employees with no claim on the benefits enjoyed by typical workers like health insurance and wage guarantees.
"Except when agreed to by written contract, a transportation network company driver is not an agent of a transportation network company," HB 217, the Ohio bill that passed this week, reads.
The Florida bill faces a more uncertain future. That state's House of Representatives passed a bill that would allow the state government to preempt local rules governing Uber-type companies, but the Senate seems poised to block it.
A bill in New York that would create a statewide licensing system for TNCs does not contain language pertaining to drivers as independent contractors. Over 60 counties, cities, and towns have passed rules or legislation pertaining to TNCs or ride-sharing, Uber says.
Either way, the states may only provide so much protection for Uber. A ruling in the class action lawsuit in California could spark a flurry of legal activity that may eventually lead to the Supreme Court. And a ruling by those nine justices could make all of Uber's local policy efforts for naught.