AB5 Solved!

This is getting more and more complex – and it really doesn’t need to. In 2009, the world was introduced to a new type of cab company – one in which drivers and riders connected through an app instead of dialing the phone. That was pretty much the difference: how the driver and rider connected. The company is known today, as ‘Uber’ but was founded as ‘Ubercab’ so it’s pretty clear that even THEY know they’re a cab company that uses an app to connect driver and rider.

The thing is, Uber didn’t want to take responsibility for their drivers as employees so they started insisting they’re NOT a transportation service. They call themselves an “app-based company.” It’s clear to anybody paying attention that Uber IS a transportation service. After all, what good is their app without the drivers? But our society has devolved to a point where one has only to form a sentence and said sentence must be treated as equal to all other sentences. (Yes, it’s exactly as stupid as it sounds…)

So…Uber forms a sentence – says they’re an app-based company – and California is flummoxed. California wants the drivers classified as employees since no Uber driver works without Uber’s direct involvement. So the California state legislature passed Assembly Bill 5 which attempts to reclassify so-called gig workers in a way that might force Uber to accept it’s responsibility to it’s drivers. The thing is, AB5 created MASSIVE problems in the work force and the economy as one industry after another was inadvertently impacted. California started issuing waiver after waiver and finally put out – in the form of AB2257 – a long list of job categories exempted from AB5 strictures.

It won’t be long until they’ve exempted everybody BUT the driver services like Uber and Lyft at which time the driver services will take AB5 BACK to court and claim it’s unconstitutional because it’s AIMED at Uber and Lyft.

So I got to thinking about what makes an actual “app-based company” and I think I’ve stumbled onto something. I used ‘Spotify’ as my model. (Full disclosure: I signed up for Spotify, once, but don’t use it much and have no other ties to them…) Spotify really is an app-based company. What I mean is, I can download the app, sign up as a user, tell the app what kind of music I prefer, and begin listening. Easy. At no time do I have to interact with a Spotify representative to use the service. And THAT’S the key…

Rather than trying to create legislation to correct the problem and then legislation to try to correct the issues created by the previous legislation and then very likely needing to create even MORE legislation to try to clean up the problems from the earlier legislation, I propose that for legal and tax purposes California simply define an “app-based company” as a company that provides it’s products or service without any representative of the company directly interacting with the general public.

If Uber can deliver it’s product without drivers, fine, they’re an app-based company. If they can’t, they’re not. It really IS that simple. As a transportation company, they can take responsibility for their drivers just like all the other cab companies do…

AB5 was originally introduced by Lorena Gonzalez from the San Diego area. If anyone can get this idea in front of her, it might help to eliminate a bunch of legislative entanglement in the future…

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