Law could idle operations in California: Uber chief

Marco Green
August 13, 2020

Ride-hailing companies Uber and Lyft must classify their drivers as employees rather than freelancers, a judge in California has ruled. The court order could block the companies from classifying drivers as independent contractors. Earlier this week, California won a preliminary injunction against Uber and Lyft.

"Drivers do not want to be employees, full stop".

According to an analysis by the University of California-Berkeley Labor Center, Uber and Lyft collectively would have paid $413 million into the California Unemployment Insurance fund from 2014 to 2019 if their drivers were classified as employees.

Schulman delayed enforcing his order by 10 days to allow appeals, which Lyft said it will pursue.

Uber and Lyft expect to appeal the decision, which could buy them more time.

A worker cleans a sign in front of the Uber headquarters on May 18 in San Francisco, California.

Lyft (LYFT) had been accused of violating California state's Assembly Bill 5 law. Khosrowshahi, whose compensation package as CEO is $45 million, wrote that treating drivers as employees and thus compensating them appropriately would result in drivers losing their "freedom".

The rideshare rivals have maintain that most of their drivers want to remain independent even if they also are looking for benefits.

Uber argues that requiring drivers to be classified as employees would leave jobs only for a small fraction of its drivers and that costs would become more expensive.

Uber and Lyft have suffered substantial losses during the pandemic as rides have almost evaporated, with Uber's bookings declining 75 per cent in the period from April through June. The company reported adjusted earnings per share of 86 cents, falling short of the 99 cents that Wall Street analysts expected. Still, ridership has been down during the pandemic anyway, which the judge said made the injunction come at what is perhaps "the least worst time" for Uber and Lyft to adjust their business models. As a resolve, they would provide some benefits to them as workers.

Under California law, as of this year, companies are not permitted to classify workers that are part of a company's core business as contractors, without giving them benefits.

"These harms are not mere abstractions; they represent real harms to real working people", Schulman wrote.

Khosrowshahi's comments are consistent to language in a motion filed Tuesday by Uber following the court's ruling.

Becerra added: "Our state and workers shouldn't have to foot the bill when big businesses try to skip out on their responsibilities". The company would then wait until the November election, when California voters will be able to decide whether companies like Uber could keep drivers as freelancers. But Khosrowshahi says Uber would have no other choice.

Other reports by Click Lancashire

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