California lawmakers have passed a bill requiring Uber, Lyft, DoorDash, and other “gig economy” businesses to treat workers as employees instead of contractors.
Uber and Lyft say the decision simply qualifies existing law, hurts workers by removing flexibility, and will result in customers paying more.
Watch Uber and Lyft trade live.
California lawmakers have passed a bill requiring Uber, Lyft, DoorDash, and other “gig economy” businesses to treat workers as employees instead of contractors. Uber and Lyft have previously downplayed the decision as a qualification of existing law, and argued it hurts workers by reducing flexibility and will lead to customers paying more.
State senators passed Assembly Bill 5 in a 29 to 11 vote on Tuesday. The proposed law is expected to pass the State Assembly, receive the green light from governor Gavin Newsom, and take effect on January 1. It would alter the rights of at least 1 million workers including hundreds of thousands of Uber and Lyft drivers in California, according to the New York Times.
The law could set a precedent for other states: Labor groups in New York are pushing for similar protections after securing a minimum wage for ride-hailing drivers last year, and failed bills in Washington State and Oregon could gain a new lease on life, the New York Times said.
The blow to Uber and Lyft’s business models follows disappointing public debuts for both companies this year. Uber’s stock has slumped by about a quarter from its IPO price, while Lyft shares have dropped 37%.
Here’s what Uber and Lyft have said about the bill recently:
1. It’s a clarification of state law.
“If AB5 passes, it’ll simply be a qualification of existing law,” Uber CEO Dara Khosrowshahi said on the company’s second-quarter earnings call in August. “It doesn’t immediately transform drivers into employees. …read more
Source:: Business Insider