San Francisco District Attorney Chesa Boudin has filed a motion against food delivery firm DoorDash urging it to reclassify its delivery workers as employees. The move comes just days after a California judge issued a similar preliminary injunction against ride-hailing giants Uber and Lyft.
“We are seeking an immediate end to DoorDash’s illegal behavior of failing to provide delivery workers with basic workplace protections,” Boudin said in a statement. The preliminary injunction would apply to DoorDash’s operations throughout California.
A California state law, which determines if someone is a contractor or an employee through an “ABC test,” requires the company to treat its delivery workers as employees rather than independent contractors. The same law applies to Uber and Lyft as well.
On Monday, California Superior Court Judge Ethan Schulman passed a ruling that asked the latter two companies to reclassify their drivers as employees after state attorney general Xavier Becerra filed a motion. However, the action only applies to Uber’s ride-hailing business.
The company’s food delivery division, which functions just as Doordash, would continue to operate as it is, at least as of now as there’s no complaint against it yet. The San Francisco district attorney’s office was unable to comment on the discrepancy, the Financial Times reports.
Doordash faces a possible shutdown in California
It’s unclear if Doordash would be able to continue operating in California under the new rules. Classifying delivery agents as employees mean the company would be entitled to provide them with benefits including health insurance, paid leave, minimum wage, and more. A decision on this may come by October this year, according to the report.
“In the midst of one of the deepest economic recessions in our nation’s history, today’s action by the district attorney threatens billions of dollars in earnings for California Dashers and revenue for restaurants that rely upon sales from delivery to keep their businesses open,” a Doordash spokesman told the FT.
The firm argues that the majority of its delivery workers want to remain as contractors. This gives them flexibility over working hours and location. This would not be possible under an employee model. Uber and Lyft have also made similar arguments supporting their current business model.
The ruling against the two ride-hailing giants gives them until August 20 to make the necessary changes. Both companies plan to file an appeal against the decision, though. It’s unclear if the deadline will be pushed back while that appeal is heard.
According to Uber CEO Dara Khosrowshahi, it may take the company several months to change its business model and reclassify its drivers as employees in California. In the meantime, the company may have to temporarily shut done its services in the state. The same possibly goes for Doordash, and perhaps, Lyft as well.
This would result in thousands of job losses. Not quite ideal during the current COVID-19 pandemic induced economic recession.
November’s ballot measure would decide the companies’ fate
Doordash, Uber, and Lyft are all backing Proposition 22, a new measure on November’s ballot. This measure would allow California voters to override the state law that has put these companies in the current situation. The override would only apply for app-based workers, though.
The three companies have each contributed $30m to a joint fund supporting the proposition. The total backing for the campaign now stands at more than $110m.
People opposing this proposition have raised just $1.6m as of now. However, they have the support of Democratic presidential candidate Joe Biden as well as his running mate, Kamala Harris. Harris herself is a former California Attorney General and San Francisco district attorney.