Silicon Valley cab drivers have been independent contractors since the 70s. AB5 might change that.
Karan Deep has been an independent contract cab driver for nearly 20 years. He's concerned AB 5 will change that. Photo by Katie Lauer.

When Yellow Checker cab driver Karan Deep’s phone rings, he has full autonomy to accept or decline a ride. That’s because the nearly 20-year driver is an independent contractor, and always has been.

“I do it because I have relationships with customers,” Deep said. “This is my living, and I like it.”

He said that flexibility in scheduling is what keeps the cab industry alive, as ride needs fluctuate day to day, hour to hour.

But that may be in jeopardy now that Assembly Bill 5 has been signed into law.

While the legislation has been pitched to help individuals driving for companies like Uber, Lyft and DoorDash gain more equitable benefits and pay, Deep said that model simply does not work for what the cab business does today.

“Taxis won’t work like that, since you’ll be paying for them to wander around for hours,” he told San José Spotlight. “The system we have is good for the company, the driver and the customers. In this legal fight, we are fighting for our freedom.”

Larry Silva, president and general manager of Yellow Checker Cab Company Inc. since 1994, said the independent contractor model has been around since the 1970s. Since then, he also said his company has been audited twice and has twice successfully defended the classification as independent contractors for the company’s staff of 500.

He’s staying hopeful that legislators will understand the potential consequences to his industry.

“They sympathize with us because they understand that this has been a working model for 40 to 45 years, it’s not like we made this change recently,” Silva said. “The state knows that they really kind of just carved open our business and let (Uber and Lyft) have it. They know that we do need some help to at least just try to maintain what we have.”

He said the costs of moving to an employee model would cripple the business. For example, Silva said, 80 percent of Yellow Checker’s drivers own their own vehicles. As employees, the company would have to be reimbursed for miles driven, both with and without customers.

“We’re doing our due diligence right now to find out what we can make work,” Silva said. “But, at the end of the day, we’re not sure what the future holds, and that’s really the sad part of the story.”

AB 5, authored by San Diego Democratic Assemblywoman Lorena Gonzalez and signed by Gov. Gavin Newsom on Wednesday, attempts to regulate how businesses classify employees by setting three new requirements that must be met in order to remain an independent contractor, including being “free from control and direction” of the employer.

Silva said most of his hundreds of drivers don’t want to be considered employees.

“At my company of affiliated drivers, I know none that want to be an employee,” Silva said. “If you found more than 10 or 15 in the state that actually truly want to be employees, I would shake your hand because I don’t think they exist.”

Deep agreed. He said the flexibility is something drivers choose — it provides satisfaction in both pay and work-life balance.

“I’ve spoken to thousands of drivers in various places over phone, email and everything – none of them said they want to drive as an employee,” he said. “They want to keep it as it is.”

But supporters of AB 5, which include labor unions and activists, say the bill will improve workers’ lives by providing them with employee benefits such as paid time off, and healthcare, unemployment and disability benefits. A slew of Silicon Valley independent contractors surveyed earlier this month by this news organization – from drivers to barbers and manicurists – shared mixed feelings about the law, many of them unsure how or if it will impact them.

Silva fears AB 5 could negatively impact how the cab industry currently tries to stay afloat in the dramatically changing industry.

While his cab drivers once took riders to and from places like the airport and bars, he said most of the taxi industry’s business now comes from corporate accounts, especially non-emergency medical transport for Valley Medical Center and Santa Clara Family Health patients.

“Now that type of work is 80 percent of our business, and the cash business is down to roughly 20 percent,” Silva said. “It’s a difference between 4,000 orders a day and 2,000 orders a day now, which is what we’re currently providing.”

Deep said the one-on-one relationships he develops with those customers is vital to his work.

“I know that when they’ll go to doctors’ appointments, they have my number and they say ‘Hey Karl, would it be able to meet me in a few hours?’ I go home, take my son from school, go to lunch, or whatever,” he said. “They call me when they’re ready to go home.”

Those relationships and schedule could be in jeopardy, Deep said, if he is no longer an independent contractor. Deep and his fellow cab drivers are lobbying for an exemption from lawmakers in Sacramento.

The law already exempts an array of industries, including accountants, lawyers and physicians.

“Those are the kind of exceptions we’ve been asking from politicians, which is legal and would be very fair,” Deep said. “This is not just about me and not just about one person, this is about an industry trying to survive.”

Contact Katie Lauer at klauer77@gmail.com or follow @_katielauer on Twitter.

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