Today, Senator John M. W. Moorlach, R-Costa Mesa, introduced Senate Bill 990 to free drivers for Uber, Lyft and similar transportation network companies (TNCs). It would allow drivers to be classified as independent contractors. Doing so would free them from the restrictive provisions of Assembly Bill 5, by Assemblywoman Lorena Gonzalez Fletcher, D-San Diego, which improperly codified the 2018 Dynamex decision by the California Supreme Court.
Sen. Moorlach said: “In the last decade, mobile communication technology has revolutionized the way we transport ourselves, conduct our business, buy our food and contract our work. State law pertaining to the new economy is generally out of date. Rather than adjudicate Dynamex on its own merits, the California Supreme Court made a mess of the state’s labor and tax law in their flawed decision.
“Californians providing for their families or earning extra cash shouldn’t be put in the middle of a union fight in the State Capitol. There should be room in state code for both independent contractors and common law employees. If someone wants to drive as a full-time job, then drivers should be able to freely negotiate with the TNCs without the Legislature meddling in their right to earn a living.
“So while the transportation network companies figure out how they want to compromise on issues like worker’s compensation and fair wage structures, I’m introducing SB 990 to let the drivers do what they freely signed up for – drive. The gig economy is an embodiment of the free-market and does not need to be over-regulated by Sacramento politicians. I’ll leave the political gamesmanship to the people who clearly don’t understand the beauty and greatness of mutually beneficial trade.”
TNCs provide prearranged transportation services for compensation using an online “app” to connect drivers using their personal vehicles with passengers. Drivers are not given set schedules, routes or quotas.
In April 2018, the California Supreme Court ruled in the Dynamex decision that a worker is presumed to be an employee of a company unless they meet all of the controversial three-part “ABC” test.
Signed into law in 2019, AB 5 codified the court’s Dynamex decision. On its way through the Legislative process, AB 5 picked occupational winners and losers by exempting many different industries from the requirements of the bill. Unfortunately, TNCs were not exempted from AB 5, and now drivers are forced to be classified as employees, not independent contractors. From an income tax perspective, this is an onerous financial burden on drivers, jeopardizing what will become unreimbursed necessary and ordinary business expenses.