California Law Aims to Balance Rider Costs & Driver Rights for Rideshare Services
A new California law is seeking to reshape the landscape for rideshare drivers,potentially lowering fares for riders while concurrently strengthening driver advocacy. The legislation focuses on two key areas: enabling collective bargaining for drivers and adjusting insurance requirements for companies like Uber and Lyft.
California has long been a battleground for the debate over the classification of rideshare drivers. While a 2019 law attempted to mandate benefits for drivers, voters subsequently approved Proposition 22 in 2020 – backed by over $200 million in funding from Uber and Lyft - which maintained their status as independent contractors, exempting them from traditional employee benefits like overtime, sick leave, and unemployment insurance. Labor groups opposed the measure, arguing it allowed companies to avoid obligations to provide standard wages and benefits despite ample profits.
The newly enacted law allows rideshare drivers in California to form a union and bargain collectively with companies, even while remaining classified as independent contractors.Negotiations will focus on issues like driver deactivations, paid leave, and earnings. This differs from regulations impacting delivery app drivers like those working for DoorDash.
Alongside the collective bargaining measure, the law also reduces the required insurance coverage for accidents caused by uninsured or underinsured drivers. The previous requirement of $1 million coverage has been lowered to $60,000 per individual and $300,000 per accident.
Uber representatives have framed the combined measures as a compromise. Ramona Prieto, Uber’s head of public policy for California, stated the changes “lower costs for riders while creating stronger voices for drivers,” demonstrating a potential for collaboration between industry, labor, and lawmakers. Uber has previously stated that insurance costs account for nearly one-third of each ride fare in California.
However, not all driver advocates are satisfied.Rideshare Drivers United, a Los Angeles-based group representing 20,000 drivers, believes the law doesn’t go far enough to ensure fair contracts. They advocate for requiring companies to publicly report driver pay data to the state, citing the positive impact of similar reporting requirements in New York City, where driver pay increased after implementation.They argue state oversight is crucial to ensure meaningful wage improvements for drivers over time.
The new law arrives as Uber and Lyft are also engaged in settlement negotiations with California and several cities – San Francisco, Los Angeles, and San Diego – regarding allegations of wage theft from drivers prior to the implementation of Proposition 22.
