While Uber and Lyft are often the go-to example when it comes to disruption of an industry, the ridesharing platforms are also often cited for another aspect – its drivers.
More specifically whether they are considered employees or contractors. Uber in particular has held that its drivers are contractors and not employees, which formed the basis of a legal battle with the CCMA locally back in 2018.
During that case Uber drivers were indeed deemed to be employees, and now the state of California has come to a similar ruling regarding both Uber and Lyft drivers, according to the San Francisco Chronicle.
This decision was made by the California Public Utilities Commission, which ruled that, “a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor.”
This falls under the state’s new law, AB5, which specifically addresses gig workers, that came into effect on 1st January this year.
There will no doubt be some push back from both Uber and Lyft, as both companies had filed for rulings that would prevent drivers from being categorised as employees, along with tabling a ballot for November this year that would push to ensure all app-based drivers would be excluded from AB5.
While the state of California has been successful in stopping any of Uber and Lyft’s plans this time around, in previous cases, drivers have been deemed to be contractors. In 2018 a similar case came to the fore in Pennsylvania, with Uber drivers classified as “freelancers” by a judge at the time.
“If California regulators force rideshare companies to change their business model it would affect our ability to provide reliable and affordable services, along with threatening access to this essential work Californians depend on,” Uber spokesperson, Dan White, told NBC News following the latest ruling.
Whether companies like Uber and Lyft would risk leaving California and Silicon Valley as a result of this new ruling remains to be seen.
Either way, the debate over the status of ridesharing platform drivers continues.
[Image – Photo by Thought Catalog on Unsplash]