Uber Technologies Inc. and Lyft Inc. agreed to back a state-supervised way for California drivers to unionize and collectively bargain on industry-wide pay and benefit guarantees, under a new legislative deal that provides the companies relief on insurance costs.
Legislative leaders and Gov. Gavin Newsom (D) on Friday announced support for a pact that includes passing a driver bargaining bill (AB 1340) as well as the rideshare industry-backed SB 371, which lowers the amount of uninsured motorist insurance the state requires the companies to carry for drivers. The Service Employees International Union sponsored AB 1340.
The bargaining bill is similar to a ballot measure Massachusetts voters passed in November. Some states have turned their attention to securing bargaining rights for drivers while fights persist in courts and legislatures over ride-hail drivers’ classification, pay, job protections, and benefits.
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State-level agreements create a model for drivers to organize and negotiate a labor contract outside the federally supervised union rights provided by the National Labor Relations Act, which doesn’t cover them since they’re classified as independent contractors instead of employees.
AB 1340 won’t change gig drivers’ legal status as independent contractors in California, which voters approved through 2020 industry-backed ballot measure Prop 22.
The new legislative package will give approximately 800,000 drivers a means to organize and bargain, representing “the largest expansion of private sector collective bargaining in California history,” David Green, president of SEIU Local 721, told reporters in a press call Friday.
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Lyft and Uber said the reduced insurance requirement will improve affordability for riders. Uber has said insurance costs account for about a third of total fares statewide, and as high as 45% in Los Angeles, with the uninsured motorist coverage requirement a significant portion of the total cost.
Uber has made a priority of pushing for insurance reform at the state level, and has filed three lawsuits this year accusing lawyers and medical providers of making fraudulent insurance claims that it says have cost the company millions in legal fees.
“With Sacramento now aligned on the need to make rideshare more affordable in California, we’re happy to see these two important pieces of legislation moving forward together,” said Ramona Prieto, Uber’s head of public policy for California, via email.
“This deal is a major victory for both riders and drivers in California,” said Nick Johnson, Lyft’s director of public policy, in a statement.
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