California Assemblywomen Lorena Gonzalez Fletcher has introduced Assembly Bill 1099 – aptly named after contract workers who receive 1099 tax forms for the incomes they’ve earned rather than traditional W-2s for regular employees.
AB 1099 would force companies that accept credit card payments to accept tips on credit cards as well.
This directly hits Uber, the digital ride-hailing company, because passengers are not currently permitted to provide tips via credit card transactions only via cash. In comparison, Uber’s competition Lyft does permit tips on credit cards.
Uber has intentionally not included the tipping function for several reasons, but one of them is that they want to remove the pressure of drivers expecting a tip (regardless of their service) and riders' feeling forced to tip, even if they don't want to do so. Uber's leaders feel like tips are not the attraction for drivers but rather that good steady income from a big base of riders is.
The bill would hamper Uber's business practices without having to mention the company by name.
The bill isn’t exclusive to ride-hailing apps but includes nail salons, spas, and other serviced-based companies that exclude credit card tips – often for good reasons such as the cost.
However as the LA Times finds, the Assemblywoman is not after tips, but contractors. She wants them to be able to unionize and sees this as the first step in that process.
"To only accept tips by cash is tough on the driver," Gonzalez Fletcher said in an interview.
Last year, Gonzalez Fletcher pulled a bill that would have allowed gig economy workers to collectively bargain, saying the matter needed more study . She still plans to advance collective bargaining rules to Gov. Jerry Brown prior to his leaving office in 2018.
"It’s one hurdle at a time," she said.
Interestingly, the bill this legislator introduced last year to allow Uber drivers to unionize got nowhere because parties on every side saw it as a flaming mess – including the unions. Recently, they weighed in on discussions they are having directly with Uber drivers and the difficulty they see in getting contract/on-demand workers on board with a union agenda:
“I think last year would have been a disaster,” said Rome Aloise, an international vice president for the Teamsters, who is leading an effort to organize ride-hailing drivers in California.
In California, the Teamsters held conversations over the past year with ride-hailing industry members, but those have stalled in recent months, Aloise said…
In preparation for those discussions, Aloise said the Teamsters met with hundreds of ride-hailing drivers in California and learned the difficulties in trying to organize them. In one circumstance, Aloise said, the union met with 30 drivers to discuss various issues, and when he tried to follow up a couple of weeks later, many in the group had stopped driving for the companies. While all drivers want better pay, he said, those who work for a few hours each week have different interests than those who do it full time.
“The issues, in some cases, are almost as diverse as the drivers,” Aloise said. “It’s kind of like a mixture between the Tower of Babel and herding cats.”
The unions would like for people who are contract workers in the sharing economy to be converted to foot soldiers in their ever shrinking unions. They don’t realize that people who participate in the on-demand or gig economy – one in four adults according to Pew – are very often looking for flexibility and not just a steady paycheck. Many drivers only operate 10-20 hours a week and they have no set schedule but determine their own schedule. That kind of flexibility brought to us by technology is the opposite of the structured, pre-negotiated scheduling that unions push for.
Progressive lawmakers, regulators, and unions want to force the sharing economy and new workforce into the outdated models that have dominated the American workforce. The times are changing and they need to change with them. When laws and regulations are adapted to the workforce, it expands economic activity and opportunity – making workers and families better off.
Government doesn't need to step in here because people can give tips with the minor inconvenience of having to carry cash.