Uber says it will continue operating food delivery business Uber Eats in California even if its main ridesharing business is forced to shut down on Friday (Aug. 21) because of a recent court order, Reuters reported.
The order mandates that Uber and rival Lyft treat their workers as employees, including providing them benefits, rather than as gig workers as has always been the case before. If the companies don't comply, they could face penalties, including not being able to operate any longer.
But a spokesperson for the company said Uber Eats might not be included in that mandate.
The pandemic has seen more widespread use of Uber Eats, as people have had to stay inside due to shutdown orders and the general fear of contracting the coronavirus. In the second quarter, the company's delivery orders more than doubled, while ride-hailing trip bookings fell precipitously due to no one going anywhere.
California, which makes up 9 percent of Uber's total U.S. earnings, has accused Uber and Lyft of violating the state's new Assembly Bill 5 (AB5) law, which requires gig workers to be classified as employees, netting them benefits such as healthcare. On Aug. 10, a judge in the state said both companies had to treat workers as employees. And while the companies have filed appeals, it's unknown if the outcome will change, Reuters reported.
The gig economy has seen a shift with the court loss for Uber and Lyft, PYMNTS reported, as it addresses the long-standing elephant in the room of how gig workers are treated on the job. Those workers are often left without benefits and at the mercy of uncertain, inconsistent schedules and pay. The companies have contested that their workers enjoy the flexible work lifestyle of the gig economy.
Uber CEO Dara Khosrowshahi argued in a recent New York Times opinion piece that having to classify workers as employees would mean not being able to employ as many people overall and not having the resources to continue operating in as many cities, along with higher costs for rides.