Worker advocates shouldn’t compromise, ex-lawmaker tells symposium

At a daylong symposium on gig work at McGeorge School of Law, former Assemblywoman Lorena Gonzalez conceded there were valid criticisms of her signature law, AB 5. But then the leader in waiting at the California Labor Federation came out swinging, saying some opponents of the law didn't negotiate in good faith as she took swipes at fellow Democrats and predicted Proposition 22 could still go down in court.

Later, the general counsel for the Silicon Valley Leadership Group accused gig work critics of playing politics and ignoring the wishes of workers. An economist said the impact of gig work has been more limited than many people think and has largely affected very inefficient markets.

Gonzalez keynoted Friday's symposium, "California Dreaming: Regulating the Gig Economy." She was fiery when asked about compromising with business interests.

"I reject the idea that I'm looking for middle ground," Gonzalez said. "I think that's been the problem with Democrats and with worker advocates for too long, an acceptance of looking for middle ground. Why would we look for middle ground when we've been pushed so far to the right, so far into a corporate structure that puts corporate interests above workers?"

She said this point was brought home to her during the negotiations around AB 5. This 2019 bill codified Dynamex Operations West Inc. v. Superior Court of Los Angeles, 4 Cal. 5th 903 (2018), a decision she called "a gift" for changing the test about whether a company can classify a worker as an employee or a contractor. Some representatives of gig work companies she negotiated with were former President Barack Obama administration staffers.

"I was very skeptical of anyone who came in and said, 'I was in the Obama administration,'" Gonzalez said. "That became the keyword for a Democrat who was going to screw us."

It quickly became clear that gig work companies would settle for nothing less than being exempted from the law, she said. Gonzalez also regrets she "sold out" newspaper delivery drivers by exempting them from the law, saying pressure from newspaper editorial boards was going to make it difficult to pass AB 5 without this change.

These workers could still sue and win under the Borello test, the pre-Dynamex standard, Gonzalez added. She also said she thought Proposition 22 would itself be overturned.

An Alameda County Superior Court judge invalidated it last year, writing that among other problems it interfered with the Legislature's authority. That case is on appeal. Castellanos v. State of California, A163655 (Cal. App. 1st, filed Sept. 21, 2021).

Gonzalez also said the rise of gig and freelance work is indirectly responsible for some of the epidemic of unemployment fraud during the pandemic. In 2021, the Employment Development Department reported that "95% is from the federal Pandemic Unemployment Assistance. This is the program designed to allow freelance workers to access benefits without employer verification.

Peter Leroe-Muñoz had a very different take. The general counsel of the Silicon Valley Leadership Group backed Proposition 22 because of the flexibility it gave both workers and employers, he said. Passed by voters in 2020 by a 17-point margin, Proposition 22 defined "app-based transportation (ride-share) and delivery drivers as independent contractors."

"Instead of using workers as political tools or assuming we can divine their intent, why don't we listen to them when they say they want flexibility and freedom that come with app-based work," Leroe-Muñoz said. "And I think we should listen to California voters when they say they overwhelmingly agree with that."

Leroe-Muñoz said gig work has raised earnings for many people who work for these platforms. He cited research from the UC Riverside School of Business Center for Economic Forecasting and Development that found drivers for companies such as Uber Technologies Inc. and Lyft Inc. made $34.46 per "active hour" of driving, defined as when they had a passenger in the car.

Leroe-Muñoz said food delivery applications helped keep many restaurants in business during the pandemic. He cited surveys finding drivers are satisfied with gig work and want to remain independent contractors, including one from Benenson Strategy Group. This study, touted by Uber during the Proposition 22 campaign, found 85% of drivers preferred the status quo.

But Veena Dubal, a professor at UC Hastings College of the Law, said that survey asked drivers if they would prefer being an employee or being able to set their own schedule. There's no legal reason an employer couldn't offer both, she said.

"This question, for those of you trained in survey methods, is actually double-barreled," Dubal said. "It essentially requires respondents to answer two questions at once when their opinions about the two might diverge."

While Gonzalez and others have predicted there are efforts to take the gig work model into other markets, Jeffrey Michael said so far the biggest growth has happened in a sector that was plagued by high costs and poor service.

"It's really the transportation sector where this is taking off," said the director of the public policy programs and professor of public policy at McGeorge. "The taxi industry wasn't providing good service to people."