Regulations

Limo Industry Leaders Hail Big Labor Blow To Uber, Lyft

Martin Romjue
Posted on May 2, 2018
A recent California Supreme Court decision could reclassify the working relationship between independent contractors and gig economy employers. (Flickr.com Creative Commons image by Sen. Mark Warner)
A recent California Supreme Court decision could reclassify the working relationship between independent contractors and gig economy employers. (Flickr.com Creative Commons image by Sen. Mark Warner)

The chauffeured transportation industry was dealt an unexpected victory this week with a California Supreme Court decision that tightens the terms defining an independent contractor while widening the scope of which workers qualify as an employee.

Depending on how the ruling reverberates and is applied, it could potentially force transportation network companies (TNCs) like Uber and Lyft to reclassify many of their drivers as full- or part-time employees. It also could make the TNCs vulnerable to staggering costs and payments on driver wages, overtime pay, back wages, benefits, workers' compensation, unemployment insurance, and paid sick leave.

Law.com: Three Takeaways From The Gig Economy Ruling: Employers will "have to go back to the drawing board to determine the extent they can change their business models or work around the new test,” one attorney says.

CNNMoney: CA Ruling Pressures Uber, Lyft, And Other Gig Economy Employers: A ruling issued Monday will make it more difficult for employers in the state to treat their workers as independent contractors, who don't enjoy many of the rights employees do.

Following the April 30 ruling, the National Limousine Association and the Greater California Livery Association proclaimed it a precedent-setting first step in gaining labor law and wage equity between the ground transportation services they represent and the TNCs.

“The California Supreme Court’s adaptation of improved standards for the definition of employees versus independent contractors is an extremely significant win for the American worker,” said NLA President Gary Buffo, also the CEO of Pure Luxury Transportation in Petaluma, Calif. “Furthermore, the court’s new ‘ABC’ test clearly demonstrates that Transportation Network Company drivers are employees of the companies that they work for, and deserve the benefits and protections afforded to them under the Fair Labor Standards Act. This is an important legal precedent that should set the pace for jurisdictions across the nation to ensure that our economy continues thrive.”

“California finally got this right,” said Scott Solombrino, an NLA board director and legislative leader and CEO of the Dav El/Boston Coach Chauffeured Transportation Network. “The fact that our nation’s most populous state had barely examined this issue up until now is appalling, but I am delighted that they finally realize that companies like Uber and Lyft are cheating my fellow Americans through their rampant misclassification of workers. While the fight for fair wages and benefits is far from over, this is an important step in the right direction that will result in a ripple effect across the country. I call upon all states to closely examine this ruling, and finally correct a major injustice that has been going on for years.”

The NLA now takes those decisions to the U.S. Department of Labor and forces them to enforce the existing laws, Solombrino added. "We also publicize it so other regulators see how people are changing their direction on this issue. Court cases matter because they set precedents and it also makes people focus on issues pending in other states. Judges like to follow other judges."

The court ruling is the second big blow to Uber in as many weeks. The California Public Utilities Commisson decided April 26 to categorize Uber as a commercial charty party carrier in California in additon to a TNC, which means it must register, pay fees, and follow rules like other ground transportation services in the state such as chauffeured car and taxicab companies.

"The Supreme Court decision is the biggest one related to TNCs that’s happened in the state of California," said Mo Garkani, GCLA President and owner and CEO of Long Beach-based COTS Group (Continental Limousine). "There have been many lawsuits filed, including from the trucking and delivery sectors. This decision affects thousands of businesses in California, and couldn’t come at a better time for us in our battle with the TNCs. I think it underscores how all employers must abide by the rules. I think there will be much more good news to follow."

Jeff Brodsly, GCLA second vice president and CEO of Chosen Payments, said California operators could eventually compete on a more level playing field if TNCs must abide by the same labor rules as most charter party carriers.

"As we know, Rome was not built in a day, but with the right people and organizations chiseling away something of the stature of Rome can and will collapse,” Brodsly told LCT. “That’s what’s happening here. This has been a work in progress for years. With recent efforts, we are finally getting our voices heard by the right people, and I believe have helped fast track this decision."

Among the GCLA's next steps will be to keep up awareness and pressure of the safety risks involved in using independent contractor drivers as well as pointing out the public revenue the state loses from companies that do not properly classify their workers based on federal and state labor laws.

“Two big California rulings in one week did not happen by accident, and the GCLA and others involved could not be more proud to have this happen off the heels of the recent meetings with lawmakers," Brodsly said. "No doubt it has been a collective effort of many years but the recent pressure and relentless bulldogging we have applied certainly helped. We thank all who influenced, helped or supported this effort, and thank the NLA for their support and collaboration with the GCLA.”

Related Topics: California operators, DOL issues, Gary Buffo, gig economy, Greater California Livery Association, Jeff Brodsly, labor laws, legal issues, Lyft, National Limousine Association, Scott Solombrino, TNCs, Uber

Martin Romjue Editor
Comments ( 1 )
  • Frank Cicero

     | about 23 days ago

    I cannot speak for Calafornia but here in NYC where envelopes under the table is the norm where it became precedent over the security of the city . We have yellow,green, ride share, base car services, black car, and luxury limousines. This issue could be easily fixed but that would upset the envelope flow. Instead of going after uber we should focus our attention to the insurance companies and put pressure on them to insure only certain vehicles that is applicable to app and car service bases . Luxury vehicles including SUV should not apply to said services since they are dealing with mass transit customers at a ridulous rate.

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