California Tells Uber And Lyft Their Drivers Are Employees

Lyft and Uber stickers on car

The California agency that regulates ride-hailing companies Uber and Lyft said their drivers are considered employees under the state’s new gig work law, the latest development in the fight over drivers’ status, Reuters reported.

In a letter to the ridesharing companies, Douglas Ito, director of the California Public Utilities Commission (CPUC), reminded them of the July 1 deadline to secure workers’ compensation coverage for drivers.

The letter outlined the consequences for not complying, noting the agency can cancel, revoke or suspend a carrier’s operating authority, and fine a carrier, for violations.

Uber, Lyft and other ridesharing companies have opposed the measure arguing it would devastate their business, raise the price of rides and limit rides in rural areas.

They argue their drivers were properly classified as independent contractors and most of them do not want to be considered employees, preferring the flexibility of on-demand work, the report said.

Later this year, a ballot initiative sponsored by Uber, Lyft and DoorDash will ask voters to rescind the law.

Last fall, California lawmakers approved the landmark measure to require gig-economy companies to treat workers as employees instead of independent contractors. The change impacts more than 1 million workers in the state.

Unlike contract workers, employees have protections such as minimum wage, paid sick days and health insurance benefits.

At the time, Assemblywoman Lorena Gonzalez (D-San Diego), the bill’s sponsor, said lawmakers cannot allow the companies to pass business costs on to taxpayers and workers, Business Insider reported.

“It’s our job to look out for working men and women, not Wall Street and their get-rich-quick IPOs,” she said.

After Uber filed its initial public offering (IPO) in April, two weeks after Lyft went public, PYMNTS posed the question of whether Uber could be 2020’s next trillion-dollar platform.

Last fall, ride-hailing platforms were seen as an employment  boon in the transportation sector. In 2019, a Bureau of Labor study revealed the number of part-time or full-time taxi drivers had tripled over the last decade. The dramatic rise was not due to more people driving traditional taxis, but taxi services provided as part of a ride-hailing platform, the report said.



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