Ride-sharing giants Uber and Lyft cease resistance to California legislation supporting driver unions.
Uber, Lyft to Allow California Drivers Unionize as Part of Insurance Reform Deal
In a significant move for the rideshare industry, Uber Technologies Inc. and Lyft Inc. have agreed to support a state-supervised way for California drivers to unionize. This decision comes as part of a larger legislative package aimed at improving affordability for riders and drivers alike.
The deal, announced by legislative leaders and Gov. Gavin Newsom (D), includes the passage of two pieces of legislation: the driver bargaining bill, AB 1340, and the rideshare industry-backed SB 371.
AB 1340, sponsored by the Service Employees International Union (SEIU) California, will give approximately 800,000 drivers a means to organize and bargain for wage and benefit guarantees. This move represents 'the largest expansion of private sector collective bargaining in California history.'
On the other hand, SB 371 aims to lower the amount of uninsured motorist insurance the state requires the companies to carry for drivers. Insurance costs account for approximately a third of total fares statewide, and up to 45% in Los Angeles, with the uninsured motorist coverage requirement a significant portion of the total cost.
Uber's head of public policy for California, Ramona Prieto, has stated that with Sacramento now aligned on the need to make rideshare more affordable in California, they are happy to see the two pieces of legislation moving forward. Similarly, Lyft's director of public policy, Nick Johnson, has stated that this deal is a major victory for both riders and drivers in California.
It's important to note that AB 1340 won't change gig drivers' legal status as independent contractors in California. This is similar to a ballot measure Massachusetts voters passed in November.
Uber has prioritized insurance reform at the state level and has filed three lawsuits this year accusing lawyers and medical providers of making fraudulent car insurance claims. The lawsuits are estimated to have cost the company millions in legal fees.
The new legislative package comes as part of a broader legislative deal involving Uber, Lyft, and the state government, announced alongside SB 371. This deal marks a significant step forward in the evolution of the rideshare industry in California.
