Posted on

Prop 22 opponents say Yes on 22 should not be able to mail flyers as nonprofit

Opponents of California’s Proposition 22, the measure that seeks to continue classifying rideshare drivers and delivery workers as independent contractors, filed a complaint this morning with the United States Postal Service. The No on 22 campaign alleges the Yes side is not eligible for a nonprofit postal status and is asking USPS to revoke its permit.

It’s much cheaper to send campaign mailers as a nonprofit organization. For example, sending between 1 – 200.000 small mailers to every door normally costs $0.302 per piece. As a non-profit, that costs $0.226 per piece, according to USPS. To be clear, the Yes on 22 campaign confirmed it was formed as a nonprofit organization under IRS section 501(c)(4), which pertains to social welfare organizations. But the No on 22 side says USPS erred in approving the Yes on 22 campaign.

“The Yes on 22 nonprofit permit was unlawfully issued,” a lawyer for No on 22 wrote to USPS Postmaster General Louis DeJoy. “[…] This misuse of the nonprofit permit coming from a corporate backed $200 million campaign is unprecedented and should be remedied by the Postal Service immediately.”

According to USPS, any organization that wants to send mail as a non-profit must first be authorized by the postal service as being eligible. Those that are eligible for nonprofit privileges, according to USPS, include “some political committees” but not “certain political organizations.” The political committees that may qualify for nonprofit prices regardless of nonprofit status, according to USPS, are the national or state committees of a political party, and the Democratic or Republican congressional or senatorial campaign committees.

“Campaign committees participating in ballot measure advocacy routinely form themselves as non-profits under section 501(c)(4) of the Internal Revenue Code, as the No on 22 lawyers know well,” Yes on 22 campaign spokesperson Geoff Vetter told TechCrunch. “Furthermore, the IRS granted Yes on 22’s non-profit status. As a 501(c)(4) organization, Yes on 22 is eligible for the appropriate non-profit postage rates with the USPS, which we applied for and were granted by the U.S. Postmaster. Moreover, pursuant to USPS Customer Support Ruling 128 – the USPS has a long-term policy in place of allowing the ballot measure committee of a duly authorized nonprofit to mail under the non-profit’s authorization. The above is true for many ballot measure campaigns, and as stated, like all entities, our applications were reviewed and approved by both the IRS and the USPS.”

To date, the Yes on 22 campaign has contributed $185,096,892 to its cause. The Yes on 22 committee consists of companies like Uber, Lyft, Instacart and DoorDash, as well as drivers, small businesses, and public safety and community organizations. The bulk of its funding has come from Uber, Lyft and DoorDash. In comparison, No on 22 has contributed $12,166,063.

“It’s outrageous but not surprising that the app companies that are going to the mat to keep shortchanging workers would shamelessly rip off the postal service,” No on Prop 22 spokesperson Mike Roth said in a statement. “This is just more evidence of the kind of greed we are dealing with from these companies who are spending $186 million in their selfish quest to buy themselves a new law but refused to buy their workers PPE in a pandemic.”

TechCrunch has reached out to USPS and will update this story if we hear back.

Read More

Posted on

Track autonomous vehicle testing in your state with this new tool from the US government

The U.S. government rolled out a new online tool Wednesday designed to give the public insight into where and who is testing automated vehicle technology throughout the country.

The official name of the online tool — Automated Vehicle Transparency and Engagement for Safe Testing Initiative tracking tool — is a jargony mess of a word salad. Fortunately, its mechanics are straightforward. The online tool gives users the ability to find information about on-road testing of automated vehicles in 17 cities throughout the United States. The public can find out information about a company’s on-road testing and safety performance, the number of vehicles in its fleet as well as AV-related legislation or policy in specific states.

The AV tracking tool is part of the Automated Vehicle Transparency and Engagement for Safe Testing  Initiative, called AV TEST for short, that was announced in June. The National Highway Traffic Safety Administration is overseeing the AV TEST Initiative.

The online tool is hardly comprehensive, but it’s a start, and continues to expand. The tool currently shows data in 17 cities, including Austin, Columbus (Ohio), Dallas, Denver, Jacksonville, Orlando, Phoenix, Pittsburgh, Salt Lake City, San Francisco and Washington, D.C. The data might include testing activity as well as dates, frequency, vehicle counts and routes, NHTSA said.

The information on the interactive web page is based on information that companies have volunteered. In other words, companies testing automated vehicle technology are not required by the federal government to provide data.

However, a growing number of AV founders and engineers understand that public education and acceptance will be necessary if they ever hope to commercially deploy their technology. Ten companies and nine states have already signed on as participants in the voluntary web pilot. The participating companies, to date, are Beep, Cruise, EasyMile, FCA, LM Industries, Navya, Nuro, Toyota, Waymo and Uber Advanced Technologies Group. The online tool also contains voluntarily submitted safety reports from Aurora, Ike, Kodiak, Lyft, TuSimple and Zoox.

NHTSA has limited the number of companies submitting data during the pilot phase, Dr. Joseph M. Kolly, the agency’s chief safety scientist said during a briefing earlier Wednesday.

“The more information the public has about the on-road testing of automated driving systems, the more they will understand the development of this promising technology,” NHTSA Deputy Administrator James Owens said in a statement. “Automated driving systems are not yet available for sale to the public, and the AV TEST Initiative will help improve public understanding of the technology’s potential and limitations as it continues to develop.”

Read More

Posted on

Hear from Lyft, Cruise, Nuro and Aurora about the road ahead for driverless vehicles

Autonomous vehicles have yet to become mainstream, but companies like Lyft, Cruise, Nuro and Aurora are still fighting the good fight. The AV space has always faced its share of regulatory and development hurdles, but this year brought a new set of hurdles with the COVID-19 pandemic.

At TechCrunch Sessions: Mobility, we’ll hear from Cruise, Lyft, Nuro and Aurora about where they are in their respective journeys to public deployment and how they’ve navigated the year.

Cruise Director of Government Affairs Prashanthi Raman 

Earlier this year, before the world blew up, Cruise received a permit in California to begin transporting passengers. Cruise also began focusing more on hardware earlier this year. That all came after Cruise had already scrapped its plans to launch a robotaxi service in 2019. In the throes of the COVID-19 pandemic, Cruise laid off 8% of its workforce in May in an attempt to cut costs. As part of the restructuring, Cruise said it would double down on its engineering efforts.

Meanwhile, Cruise still has its eyes set on public deployment, which is where the expertise of Raman comes in. It’s her job to help Cruise navigate the murky regulatory waters of autonomous vehicles.

Nuro Chief Legal & Policy Officer David Estrada 

Nuro, an autonomous delivery startup, takes a slightly different approach to autonomous vehicles. Instead of transporting people, Nuro transports goods. In April, Nuro received a permit to begin driverless testing in California. The startup, which raised $940 million from SoftBank’s Vision Fund last year, aims to deliver groceries and other goods to customers at scale.

Estrada, who previously led legal and policy operations at Bird and government relations at Lyft, is no stranger to playing ball with regulatory agencies. It’s up to him to ensure Nuro gains the trust of the public by proving the company’s commitment to safety and the law.

Lyft Self-Driving Platform Director Jody Kelman

Lyft first began testing its autonomous vehicles in California in late 2018. The company had to pause those operations earlier this year as a result of the pandemic, but resumed testing in late June.

That same month, Lyft began using data from its ride-hailing app to build 3D maps, better understand human driving patterns and improve simulation tests for the company’s autonomous vehicle program.

As part of Lyft’s go-to-market strategy, it has partnered with a number of companies. A key partner for Lyft has been Aptiv, which as of February, provided 100,000 paid rides on the Lyft app.

“We’ve got something here,” Kelman said at the time to TechCrunch’s Kirsten Korosec. “This is really a blueprint for what future mobility partnerships can look like.”

Aurora Senior Manager of Government Relations Melissa Froelich

Aurora, which launched back in 2017, had been developing a full-stack solution for self-driving vehicles that prioritized robotaxis. That changed in October 2019, when Aurora began focusing more on trucks and logistics and declared trucks would be the company’s first commercial product.

Trucking comes with its own bag of worms, but folks seem to believe that AV trucking has a clearer path to profitability. In July, Aurora expanded into Texas to test commercial routes. At TC Sessions: Mobility, Froelich will discuss how Aurora is navigating the autonomous trucking space and the challenges it faces.

Get your tickets for TC Sessions: Mobility to hear from these thought-leaders from Nuro, Lyft, Cruise and Lyft, along with several other fantastic speakers from Porsche, Waymo, Lyft and more. Tickets are just $145 for a limited time, with discounts for groups, students and exhibiting startups. We hope to see you there!

Read More

Posted on

Daily Crunch: Lyft and Uber win legal victory

Uber and Lyft may not be pausing operations in California after all, Google releases new emergency alert tools and Airbnb bans all parties. This is your Daily Crunch for August 20, 2020.

The big story: Uber and Lyft win legal victory

Earlier today, Lyft announced that it would suspend operations in California tonight as a result of a preliminary injunction forcing Lyft and Uber to reclassify their drivers as employees.

Then, in a head-spinning change of fortune, an appeals court judge granted the companies a temporary stay. They now have until early September to outline their plans for how to manage the transition, with oral arguments in the court case coming in mid-October.

Meanwhile, Uber, Lyft and DoorDash are backing Proposition 22, a state ballot measure that they’re pitching as an alternative approach to classifying gig workers.

The tech giants

Google brings emergency alert tools to Search and Maps as fires rage in Northern California — Google will display a red border that encircles a rough approximation of the active blaze.

Report: Apple quietly acquired Israel’s Camerai, formerly Tipit, a specialist in AR and camera tech — The acquisition was reported by Calcalist.

Startups, funding and venture capital

Airbnb declares all parties over indefinitely at its listings — The company notes that “unauthorized parties” have always been against its rules, even though it previously allowed hosts on its platform to selectively approve small gatherings.

DoorDash expands with on-demand grocery delivery — In contrast to many other grocery services, the company promises to deliver within an hour of your order.

China’s Waterdrop nabs $230M for its crowdfunded, mutual aid insurance platform — Waterdrop pays out when its members fall into medical dire straits.

Advice and analysis from Extra Crunch

Figma CEO Dylan Field discusses fundraising, hiring and marketing in stealth mode — The company behind the largely browser-based design tool has made a huge splash in the past few years, building a massive war chest with more than $130 million.

Zoom UX teardown: 5 fails and how to fix them — Zoom’s user experience is far from perfect.

Eric Hippeau discusses D2C growth, brand value and advice for early-stage founders — Lerer Hippeau’s portfolio companies include Axios, BuzzFeed, Casper, Warby Parker, Allbirds, DocSend, Fundera, Everlane, Giphy, Genius and the recently acquired fitness company Mirror.

(Reminder: Extra Crunch is our subscription membership program, which aims to democratize information about startups. You can sign up here.)

Everything else

Border wall crowdfunding scheme leads to Trump ally Steve Bannon’s arrest — Bannon faces charges for conspiracy to commit money laundering and conspiracy to commit wire fraud.

The founders of Blavity and The Shade Room are coming to Disrupt 2020 — Morgan DeBaun and Angie Nwandu have been building a more diverse digital media landscape for years.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

Read More

Posted on

Uber and Lyft lose bid to delay worker reclassification order in California

Uber and Lyft have lost their bid to delay a preliminary injunction that will force the two ride-hailing app companies to reclassify drivers as employees. A California superior court judge denied Thursday the companies request to delay the order from going into effect August 20.

The decision sets the stage for a legal fight and will most certainly require both companies to suspend operations temporarily in California if they fail to get the stay extended. Uber confirmed with TechCrunch it plans to file an appeal as soon as possible. Lyft said in an email that it will immediately seek a further stay from the appellate court and will file that motion by the end of this week.

On Monday, California Superior Court Judge Ethan Schulman granted a preliminary injunction forcing Uber and Lyft  to reclassify their drivers as employees. This order is set to go into effect August 20. The judge acknowledged that the order would change the nature of Uber and Lyft’s business practices in “significant ways,” and implementing the injunction would be “costly.” However, those hardships weren’t enough to sway the court from classifying drivers as employees, a decision that would force Uber and Lyft to provide unemployment insurance and other benefits.

California Attorney General Xavier Becerra, along with city attorneys from Los Angeles, San Diego and San Francisco, brought the lawsuit against Uber and Lyft to force the companies to comply with AB 5.

Uber’s attorneys requested in a motion that an injunction should be stayed while the Court of Appeals makes its decision over whether the ruling should stand. The attorneys argued that “Uber will almost certainly be forced to shut off the Rides platform in California if the injunction goes into effect, which would irreparably harm Uber and all who rely on its Rides app to generate income for them and their families — particularly in the midst of a pandemic.”

Both companies have made comments this week that if the stay isn’t extended, operations will need to be suspended. It could lead to a more dramatic move — at least from Uber, which has threatened to leave California for good.

As this legal wrangling plays out, Uber and Lyft are also aiming to build support for Prop 22, a measure that voters will have a chance to approve or reject in the November elections.

Prop 22 would require companies like Uber and Lyft to provide a number of protections laid out in AB 5. The measure says drivers must receive an earnings guarantee of at least 120% of minimum wage while on the job, 30 cents per mile for expenses, a healthcare stipend, occupational accident insurance for on-the-job injuries, protection against discrimination and sexual harassment and automobile accident and liability insurance.

There is one key difference that makes it appealing to Uber and Lyft: Prop 22 would keep drivers classified as independent contractors.

Read More

Posted on

Shares of Uber, Lyft drift lower after California judge says that contract drivers are employees

Shares of Uber and Lyft dipped modestly after a California judge granted a preliminary injunction that TechCrunch reports could force the two American ride-hailing companies to reclassify drivers as employees in the state.

Uber’s stock is off about 1.3% following the cessation of normal trading hours after dipping around 2% in regular trading. Lyft’s stock is down a sharper 2.1%, though its shares rose during regular trading, making the impact of its after-hours declines smaller in aggregate.

As TechCrunch noted in its coverage of the ruling, the costs associated with classifying current drivers as employees and not independent contractors could prove material. While the decision might be meaningful, investors seemed unmoved. Reading the Wall Street tea leaves can be an exercise in futility, but in this case the months of chatter and legal wrangling over the central question of whether drivers should be employees may have desensitized investors to any particular news item.

Both companies provided statements after the news broke, each stating that they will appeal the ruling. That legal posture could also help assuage investor concerns about short-term economic impacts regarding the injunction, which is currently set to take effect in 10 days.

Here’s what Lyft had to say:

Drivers do not want to be employees, full stop. We’ll immediately appeal this ruling and continue to fight for their independence. Ultimately, we believe this issue will be decided by California voters and that they will side with drivers.

And here are Uber notes:

The court’s ruling is stayed for a minimum of 10 days, and we plan to file an immediate emergency appeal on behalf of California drivers. The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law. When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression.

Uber CEO Dara Khosrowshahi published an op-ed in The New York Times today ahead of the ruling, arguing for a middle ground between the gig economy of today’s lack of worker support, and full employment.

To understand why shares of Uber and Lyft are not taking more fire from public investors in light of the news, TechCrunch turned to Uber’s most recent earnings filings. Lyft does not report Q2 earnings until this Wednesday, meaning we have less recent material from the company. Uber’s documents, however, are useful.

Filings

Uber reported earnings last week, showing stiff losses and a surging food-delivery business. The company’s ride-hailing operation was severely hampered by COVID-19 and its related impacts.

As part of its earnings cycle, Uber filed a 10-Q document. It included notes regarding the California legal situation from before the recent decision. The filing is dated August 7, 2020, or last Friday, making it about as fresh a comment from the company that we can expect regarding its pre-news perspective on the matter.

Here’s the first pertinent portion of its SEC filing, with our emphasis to help you parse it:

The Company has existing litigation, including class actions, PAGA lawsuits, arbitration claims, and governmental administrative and audit proceedings, asserting claims by or on behalf of Drivers that Drivers are misclassified as independent contractors. In connection with the enactment of California State Assembly Bill 5 (“AB5”), the Company has received and expects to continue to receive – in California and in other jurisdictions – an increased number of misclassification claims. With respect to the Company’s outstanding legal and regulatory matters, based on its current knowledge, the Company believes that the ultimate amount or range of reasonably possible loss will not, either individually or in the aggregate, have a material adverse effect on the Company’s business, financial position, results of operations, or cash flows. The outcome of such legal matters is inherently unpredictable and subject to significant uncertainties. If one or more of these matters were resolved against the Company for amounts in excess of management’s expectations, the Company’s results of operations, financial condition or cash flows could be materially adversely affected.

A bit further down in the filing, Uber said the following, regarding its chances of success:

On August 6, 2020, following a hearing on the matter, the San Francisco Superior Court informed the parties that the Court would take the motions under submission and publish its order in the coming days.

The Company intends to vigorously defend itself with regard to these actions. The Company’s chances of success on the merits are still uncertain and any reasonably possible loss or range of loss cannot be estimated.

Welcome to the coming days.

Using their share price movement as a barometer, the immediate view from investors appears to be that the possible damage to Uber and Lyft from the decision could prove modest despite.

Uber and Lyft had made profit promises to their shareholders before COVID-19 arose, harming their business results. The California decision could add another layer of difficulty for each as they work to come out of the COVID era solvent, and once again on a path to adjusted profitability.

Read More

Posted on

Human Capital: Uber and Lyft’s ongoing battle with the law and a brief history of diversity at Snap

Welcome back to Human Capital (formerly known as Tech at Work), which looks at all things labor in tech. This week presented Uber and Lyft with a fresh labor lawsuit as a judge heard arguments from Uber, Lyft and lawyers on behalf of the people of California in a separate suit brought forth by California’s attorney general. Meanwhile, Snap recently released its first-ever diversity and inclusion report — something the company had been holding off on doing for years. 

Below, we’ll explore the nuances and the significance of these lawsuits, as well as Snap’s track record with diversity and inclusion. Let’s get to it.


Gig life


CA Superior Court Judge Ethan P. Schulman heard arguments regarding a preliminary injunction that seeks to force Uber and Lyft to reclassify their drivers as employees

In May, California Attorney General Xavier Becerra, along with city attorneys from Los Angeles, San Diego and San Francisco, sued Uber and Lyft, alleging the companies gain an unfair and unlawful competitive advantage by misclassifying workers as independent contractors. The suit argues Uber and Lyft are depriving workers of the right to minimum wage, overtime, access to paid sick leave, disability insurance and unemployment insurance. In June, plaintiffs filed a preliminary injunction in an attempt to force Uber and Lyft to comply with AB 5 and immediately stop classifying their drivers as independent contractors.

This week, more than 100 people tuned in to the hearing regarding the preliminary injunction. The hearing, held on Zoom, initially was only able to hold just 100 people. But the interest in the case forced the court to increase its webinar capabilities to 500. There hasn’t been a ruling yet, but Judge Schulman said we could expect one likely within a matter of days, rather than weeks.

In the hearing, Schulman expressed how hard it is to determine the impact of a preliminary injunction in this case. For example, how Uber and Lyft would comply with the injunction is unknown, as are the economic effects on drivers, such as their ability to earn income, the hours they would be able to work and their eligibility for state benefits, Schulman said.

“I feel a little bit like I’m being asked to jump into a body of water without really knowing how deep it is, how cold the water is and what’s going to happen when I get in,” he said.

Here are some other key quotes from the hearing:

Rohit Singla, counsel for Lyft

The proposed injunction would cause irreparable injury to Lyft and Uber, and would actually cause massive harm to drivers and harm to riders.

Matthew Goldberg, deputy city attorney for San Francisco

We think the parties have drastically overstated precisely what they would need to do to be in compliance with the law.

The other lawsuits against Uber and Lyft

Earlier in the week, California Labor Commission sued Uber and Lyft in separate lawsuits. The goals of the separate suits are to recover the money that is allegedly owed to these drivers. By classifying drivers as independent contractors rather than employees, both Uber and Lyft have not been required to pay minimum wage, overtime compensation, nor have they been required to offer paid breaks or reimburse drivers for the costs of driving.

What these lawsuits share is a core focus and argument that Uber and Lyft are misclassifying their drivers as independent contractors and breaking the law. These two companies have been sued many, many times for their labor practices, specifically as they pertain to the classification of their respective drivers as independent contractors. What’s different about the latest string of lawsuits is that they’re coming in light of a new law that went into effect in California earlier this year that is supposed to make it harder for these gig economy companies to classify their workers this way. The lawsuits are also coming from legislative bodies, rather than from drivers themselves. 

This moment has been a long time coming. Uber faced its first high-profile labor lawsuit back in 2013, when Douglas O’Connor and Thomas Colopy sued Uber for classifying them as 1099 independent contractors. Uber settled the lawsuit several years later in 2019 by paying out $20 million to O’Connor and Colopy, as well as the other class members


Stay Woke


Snap finally releases a diversity report

Snap, after declining to release diversity numbers for years, finally decided now was the time to make them public. Before we jump in, let’s take a quick look at Snap’s history with diversity.

2016: Snap came under fire for a couple of filters that many people called out as being racist. The first was a Bob Marley filter that basically enabled some sort of digital blackface. The second time it had to do with a lens that was supposed to be a take on anime characters. Instead, there was an outcry about Snapchat enabling yellowface.

2017: “We fundamentally believe that having a team of diverse backgrounds and voices working together is our best shot at being able to create innovative products that improve the way people live and communicate. There are two things we focus on to achieve this goal. The first—creating a diverse workplace—helps us assemble this team. We convene at the conferences, host the hackathons, and invest in the institutions that bring us amazing diverse talent every year. The second—creating an inclusive workplace—is much harder to get right, but we believe it is required to unleash the potential of having a diverse team. That’s because we believe diversity is about more than numbers. To us, it is really about creating a culture where everyone comes to work knowing that they have a seat at the table and will always be supported both personally and professionally. We started by challenging our management team to set this tone every day with each of their teams, and by investing in inclusion-focused programs ranging from community outreach to internal professional development. We still have a long and difficult road ahead in all of these efforts, but believe they represent one of our biggest opportunities to create a business that is not only successful but also one that we are proud to be a part of” – Snap’s S-1

2018: A former Snap engineer criticized the company for a “toxic” and “sexist” culture. Snap CEO Evan Spiegel later said the letter was “a really good wake-up call for us.”

2019: Snap hired its first head of diversity and inclusion, Oona King. King previously worked at Google as the company’s director of diversity strategy.

June 2020: Spiegel reportedly said in an all-hands meeting the company will not publicly release its numbers. Snap, however, disputed the report, saying it would release that data.

August 2020: Snap releases its first-ever diversity report showing its global workforce is just 32.9% women, while its U.S. workforce is 4.1% Black, 6.8% Latinx and less than 1% Indigenous.

Snap’s numbers are not good, but also nothing out of the ordinary for the tech industry. What’s novel about Snap’s report, however, is the intersectional data breakdown. You’ll note that the representation of Black women (1.3%) is lower than the representation of Black men (2.8%). The same goes for all race/ethnicity categories. Across all distinct races, there are more men than women. Again, this is not good, but it’s to be expected, unfortunately.


Don’t miss


Read More

Posted on

Judge says Uber, Lyft preliminary injunction ruling to come in ‘a matter of days’

California Superior Court Judge Ethan P. Schulman heard arguments from Uber and Lyft, as well as lawyers representing the people of California, regarding the request for a preliminary injunction that seeks to force Uber and Lyft to immediately reclassify their drivers as employees. Schulman did not make a ruling today but said we could all likely expect one to come within a matter of days, rather than weeks.

In the hearing, Schulman expressed how hard it is to determine the impact of a preliminary injunction in this case. For example, how Uber and Lyft would comply with the injunction is unknown, as are the economic effects on drivers, such as their ability to earn income, the hours they would be able to work and their eligibility for state benefits, Schulman said.

“I feel a little bit like I’m being asked to jump into a body of water without really knowing how deep it is, how cold the water is and what’s going to happen when I get in,” Schulman said.

Today’s hearing was the result of California Attorney General Xavier Becerra, along with city attorneys from Los Angeles, San Diego and San Francisco, filing a preliminary injunction in an attempt to force Uber and Lyft to comply with AB 5 and immediately stop classifying their drivers as independent contractors.

The new law codifies the 2018 ruling established in Dynamex Operations West, Inc. v Superior Court of Los Angeles. In that case, the court applied the ABC test (more on that a bit later) and decided Dynamex wrongfully classified its workers as independent contractors based on the presumption that “a worker who performs services for a hirer is an employee for purposes of claims for wages and benefits…”

In the hearing today, lawyers on behalf of the people of the state of California, and Uber and Lyft, discussed the classification of workers as independent contractors versus employees, gig worker protections bill AB 5, the definition of a “hiring entity,” unemployment benefits, paid sick leave, workers’ compensation insurance and more.

Uber and Lyft maintained that an injunction would require them to restructure their businesses in such a material way that it would prevent them from being able to employ many drivers on either a full-time or part-time basis. Uber and Lyft’s argument, effectively, is that classifying drivers as employees would result in job loss.

“The proposed injunction would cause irreparable injury to Lyft and Uber, and would actually cause massive harm to drivers and harm to riders,” Rohit Singla, counsel for Lyft, said at the hearing. For example, Lyft estimates it would cost hundreds of millions of dollars simply to process the I-9 forms, which verify employment eligibility. It doesn’t cost anything to file that form, but it would require Uber and Lyft to further invest in their human resources and payroll processes.

Additionally, Singla argued that a preliminary injunction at this stage of the case would be drastic. His argument resonated with the judge.

“It’s not every day that a judge is asked to issue an injunction on a preliminary basis, as he emphasizes, that could potentially affect hundreds of thousands of people. And that’s what we’re dealing with here.”

But the plaintiffs disagreed. That vast number of people affected is a key reason to issue the injunction, Matthew Goldberg, deputy San Francisco city attorney argued. Additionally, Goldberg argued it would be quite feasible for Uber and Lyft to reclassify its drivers.

“It’s very doable,” he said. “[…] Both of these businesses already have very large, white-collar workforces at their corporations. I can assure you that every one of those workers is getting workers’ compensation insurance” and other benefits.

He added, “extending this set of benefits to more workers, administratively, is not as difficult as they allege, given they already do this for thousands of workers.”

Additionally, there are elements of Uber and Lyft-backed Prop 22 (details below) that are similar to what AB 5 requires, so plaintiffs argue there would not be irreparable harm for Uber and Lyft to comply with AB 5. Uber and Lyft, however, disagree.

In Uber’s opening arguments, Uber counsel Theane Evangelis pointed to a number of product changes that should remove “any doubt about the compliance and demonstrate Uber is a technology platform” that operates a multi-sided marketplace she said. For example, Uber began allowing drivers in June to set their own prices.

Still, Judge Schulman pressed on Uber’s ability to satisfy Prong B of the ABC test. According to the ABC test, in order for a hiring entity to legally classify a worker as an independent contractor, it must prove (A) the worker is free from the control and direction of the hiring entity, (B) performs work outside the scope of the entity’s business and (C) is regularly engaged in an “independently established trade, occupation, or business of the same nature as the work performed.”

“If you look at Uber or Lyft, they’re not in the business of maintaining an online app by itself,” Schulman said. “That’s the technology by which they perform. Their business is providing rides to people for compensation. In plain English, that’s what they do? Isn’t it?”

Evangelis quickly replied, “No.” She argued that what Uber and Lyft do is simply connect drivers and riders through their technology platform. She also pointed to the variety of services Uber offers, such as Uber Eats and Freight. Evangelis went on to ask the judge if he would put this on pause until November, when Californians will vote on Prop 22, which is backed by Uber, Lyft and others.

The ballot measure looks to implement an earnings guarantee of at least 120% of minimum wage while on the job, 30 cents per mile for expenses, a healthcare stipend, occupational accident insurance for on-the-job injuries, protection against discrimination and sexual harassment and automobile accident and liability insurance. Most notably, however, it would keep drivers classified as independent contractors.

Judge Schulman, however, seemed flummoxed by the basis of the argument to wait until November to see what voters decide.

“It seems to me that’s not my role,” he said. “And more significantly, it seems to me, if any of us learned anything from the 2016 election, is many of us are unable to predict the outcome of elections…I just wonder about the legitimacy of an argument like that.”

Evangelis closed her time by saying that Uber believes it passes the ABC test today.

The motion for a preliminary junction was filed as part of the suit filed in May, which asserted Uber and Lyft gain an unfair and unlawful competitive advantage by misclassifying workers as independent contractors. The suit argues Uber and Lyft are depriving workers of the right to minimum wage, overtime, access to paid sick leave, disability insurance and unemployment insurance. The lawsuit, filed in the Superior Court of San Francisco, seeks $2,500 in penalties for each violation, possibly per driver, under the California Unfair Competition Law, and another $2,500 for violations against senior citizens or people with disabilities.

Meanwhile, Uber and Lyft are both facing another lawsuit from the office of the California Labor Commissioner alleging wage theft. Filed yesterday in Oakland, the suit similarly aims to enforce the labor practices set forth by AB 5.

Read More

Posted on

Uber and Lyft face new lawsuit from CA Labor Commissioner

Uber and Lyft are both facing another lawsuit from the office of the California Labor Commissioner alleging wage theft. Filed today, the suits argue both Uber and Lyft are misclassifying their drivers as independent contractors and aim to enforce the labor practices set forth by AB 5.

“The Uber and Lyft business model rests on the misclassification of drivers as independent contractors,” California Labor Commissioner Lilia García-Brower said in a statement. “This leaves workers without protections such as paid sick leave and reimbursement of drivers’ expenses, as well as overtime and minimum wages.”

The goals of the separate suits are to recover the money that is allegedly owed to these drivers. By classifying drivers as independent contractors rather than employees, both Uber and Lyft have not been required to pay minimum wage, overtime compensation, nor have they been required to offer paid breaks or reimburse drivers for the costs of driving.

AB 5, which went into law earlier this year, outlines what type of worker can and cannot be classified as an independent contractor. The law codifies the ruling established in Dynamex Operations West, Inc. v Superior Court of Los Angeles. In that case, the court applied the ABC test and decided Dynamex wrongfully classified its workers as independent contractors.

According to the ABC test, in order for a hiring entity to legally classify a worker as an independent contractor, it must prove the worker is free from the control and direction of the hiring entity, performs work outside the scope of the entity’s business and is regularly engaged in work of some independently established trade or other similar business.

These suits are seeking for the court to order Uber and Lyft to classify their drivers as employees and provide them with all the protections that come with being a W-2 employee.

“For years Uber and Lyft have been stealing wages and exploiting every legal loophole they can to avoid paying drivers what they deserve,” Transport Workers Union President John Samuelsen said in a statement. “It was shameful before and it is even more shameful now, during the middle of a pandemic, that we have allowed wealthy companies to get away with this. This lawsuit is an essential part of holding these companies accountable and protecting drivers’ rights.”

These new lawsuits come just months before Californians are set to vote on Prop 22, a ballot measure backed by Uber, Lyft and others. The ballot measure looks to implement an earnings guarantee of at least 120% of minimum wage while on the job, 30 cents per mile for expenses, a healthcare stipend, occupational accident insurance for on-the-job injuries, protection against discrimination and sexual harassment and automobile accident and liability insurance. Most notably, however, it would keep drivers classified as independent contractors.

“[…]as this lawsuit clearly demonstrates, Sacramento politicians are more interested in the wishes of their special interest donors than the will of the vast majority of drivers and are intent on stripping drivers of the freedom to choose independent work,” the Yes on 22 campaign said in a statement. “This coordinated effort by all levels of government to run a politically motivated campaign will hurt the state at the worst possible time.”

Read More

Posted on

Why investors are cheering the Uber-Postmates deal

This morning as the markets rally, shares of Lyft are up 3% while Uber shares are up 6%.

Why is Uber so far ahead of Lyft, its domestic ride-hailing rival that is suffering from the same economic impacts? It appears that investors are heartened that Uber has closed its Postmates acquisition after both firms danced around each other for some time, leading to all sorts of leaks that wound up being not coming true.


The Exchange is a daily look at startups and the private markets for Extra Crunch subscribers; use code EXCHANGE to get full access and take 25% off your subscription


This explains why Uber investors are excited about Uber’s Postmates buy; what about the smaller company is making Uber shares so buoyant? Let’s take a walk through the numbers this morning.

If we reexamine Uber Eats’ recent growth, contrast it to Ubers Rides’ own growth, mix in Eats’ profitability improvements along with Postmates’ own financial results, we can start to see why public investors might be heartened by the deal.

Afterward, we’ll toss in a note about how Postmates may provide Uber some narrative ammunition heading into earnings. This exercise should be fun, and a good break from our recent IPO coverage. Let’s get into the numbers.

Growth, losses

In case you are behind, Uber is buying Postmates for $2.65 billion in an all-cash deal. Uber estimated that it would issue around 84 million shares to pay for the transaction. At its share price as of the time of writing, the deal is worth $2.72 billion at Uber’s newer share price. For reference, that price tag is about 4.8% of Uber’s current-moment market cap.

To understand why Uber would spend nearly 5% of its worth to buy a smaller rival, let’s remind ourselves of the performance of the group that it will plug into, namely Uber Eats.

From Uber’s Q1 2020 financial reporting, the following chart will ground our exploration, showing how Eats has performed in recent quarters:

Via Uber’s financial reporting. Q1 2019 on the left, Q1 2020 on the right.

Read More