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6 min read

    6 min read

    Could things be changing for thousands of drivers – at least in California? Senior RSG contributor John Ince covers California bill AB5, plus how a generation of taxi drivers was destroyed (not by Uber/Lyft) and more in this week’s roundup.

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    California is cracking down on the gig economy [Vox]

    Sum and Substance: California just took a major step in rewriting the rules of the gig economy.

    The state Assembly passed a bill Wednesday that would make it harder for companies to label workers as independent contractors instead of employees, a common practice that has allowed businesses to skirt state and federal labor laws. The bill will now go to the state Senate.

    Hundreds of thousands of independent contractors in California, ranging from Uber and Amazon drivers to manicurists and exotic dancers, would likely become employees under the bill.

    That small status change is huge. These workers would suddenly get labor protections and benefits that all employees get, such as unemployment insurance, health care subsidies, paid parental leave, overtime pay, workers’ compensation, and a guaranteed $12 minimum hourly wage. It also means companies are fuming about the added cost.

    The California bill, known as AB5, expands a groundbreaking California Supreme Court decision last year known as Dynamex. The ruling and the bill instruct businesses to use the so-called “ABC test” to figure out whether a worker is an employee. To hire an independent contractor, businesses must prove that the worker (a) is free from the company’s control, (b) is doing work that isn’t central to the company’s business, and (c) has an independent business in that industry. If they don’t meet all three of those conditions, then they have to be classified as employees.

    My Take:  As the battleground for the employee / independent contractor showdown shifts from the courts to the legislature, it appears that the biggest state in the union is going to hand a victory to the little guys. Now that this bill has passed the California General Assembly, it needs only a victory in the Senate and the signature of the Governor to become law.

    If that happens, the entire landscape of this industry changes overnight.  Drivers will have worker protections and the right to bargain collectively. How the companies will react is anybody’s guess, but given their staggering losses, even with a favorable interpretation of worker rights, I would say their financial future is not bright – and that may be the understatement of the year.

    ‘They Were Conned’: How Reckless Loans Devastated a Generation of Taxi Drivers [New York Times]

    Sum and Substance: The phone call that ruined Mohammed Hoque’s life came in April 2014 as he began another long day driving a New York City taxi, a job he had held since emigrating from Bangladesh nine years earlier.

    The call came from a prominent businessman who was selling a medallion, the coveted city permit that allows a driver to own a yellow cab instead of working for someone else. If Mr. Hoque gave him $50,000 that day, he promised to arrange a loan for the purchase.

    After years chafing under bosses he hated, Mr. Hoque thought his dreams of wealth and independence were coming true. He emptied his bank account, borrowed from friends and hurried to the man’s office in Astoria, Queens. Mr. Hoque handed over a check and received a stack of papers. He signed his name and left, eager to tell his wife.

    Mr. Hoque made about $30,000 that year. He had no idea, he said later, that he had just signed a contract that required him to pay $1.7 million. 

    My Take:  This Is a fascinating piece of reporting by the New York Times – and in depth look at the predatory lending practices that predated the entry of ridesharing startups in New York City markets.

    The authors convincingly upend the conventional wisdom – that Uber / Lyft were the ones who made life so miserable for NYC taxi drivers. Instead, it was the lenders who artificially inflated the value of medallions and profited off of the abusive loans they peddled to unwitting drivers – often immigrants who did not understand the terms of the loan agreements they were signing.  Read the whole article if you have time. It will open your eyes.

    1 in 6 Uber and Lyft Cars Have Open Safety Recalls, Consumer Reports’ Study Suggests [Consumer Reports]

    Sum and Substance: CR’s review of 94,000 vehicle records in New York City and Seattle area shows companies do little to address open recalls.  Among the tens of thousands of Uber and Lyft vehicles registered to operate in New York City, there’s a 2011 Hyundai Sonata GLS with eight unaddressed safety recalls that range from a potential seat-belt detachment to even more alarming examples, such as possible engine failure.

    Millions of riders rely on ride-hailing services Uber and Lyft for daily transportation. But according to a Consumer Reports review of data from New York City and the Seattle area, a notable number of ride-hail vehicles registered for Uber and Lyft service, about 1 in 6, carry unaddressed safety defects.

    “Uber and Lyft are letting down their customers and jeopardizing their trust,” says William Wallace, a CR safety policy advocate. “Uber’s website says people can ‘ride with confidence,’ while Lyft promises ‘peace of mind,’ yet both companies fail to ensure that rideshare cars are free from safety defects that could put passengers at risk.”

    My Take: Ever since I found out how easy it was to get my 2006 Volvo with over 200,000 miles to pass Uber and Lyft Safety inspections, I’ve been skeptical about these companies’ safety standards.  They talk in public about their rigorous safety inspection, but that’s just talk.

    The reality is that the inspection mostly covers basics like tires, lights, signal indicators and the like.  They never really get inside the engine or under the car to find out what really might be lurking.  Kudos to Consumer Reports for bringing this issue to light.

    Launching Language Learning Tools for Drivers Via Duolingo and the National Immigration Forum [Lyft]

    Sum and Substance:  At Lyft, we believe in the power of sharing the ride. Sharing the ride isn’t just about two people (or more) in a car together, it’s about the ability of those people to connect, laugh, tell stories, and share experiences. And, language not only breaks down barriers to communication, it also breaks down barriers to education and professional development opportunities.

    Today, we’re launching a new program as part of our Driver Services program, designed to give drivers the tools they need to communicate whether they’re inside or outside of the car. Through partnerships with Duolingo, the most popular language-learning platform, and the National Immigration Forum, one of the nation’s premier immigration policy organizations, drivers across six markets will have access to free language learning tools, plus the option to earn an English proficiency certification by taking the Duolingo English Test for free…

    Cities included in the program listed below:

    • Seattle: Duolingo and The Forum
    • Houston: Duolingo and The Forum
    • Chicago: Duolingo and The Forum
    • Miami: Duolingo only
    • New York City: Duolingo only
    • New Jersey: Duolingo only

    My Take:  This partnership makes sense, for both Lyft and its drivers. Lyft is recognizing its base of new drivers is coming from communities that could benefit from additional English instruction, but instead of burying its head in the sand, Lyft is being proactive.

    Readers, what do you think of this week’s round up?

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    -John @ RSG

    John Ince

    John Ince

    John Ince is a former Fortune reporter and Wall Street banker. He has about 1,000 rides under his belt driving part time for Uber and Lyft.  He’s writing a book about his experiences entitled:  Travels With Vanessa:  A Rideshare Driver Tries To Make Sense of It all - For a sneak peak visit the link above.

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