Rideshare companies in California have been pushing back against classifying their drivers as employees for the past few years. As Uber and Lyft continue to fight the newly-enacted state law known as AB5, the California Public Utilities Commission ruled that it officially considers rideshare drivers to be employees.
The California Public Utilities Commission is responsible for licensing and regulating some transportation companies—including Uber and Lyft. For now, it’s unclear as to what practical difference this ruling makes because of rideshare companies’ resistance to reclassifying their workforce. It is clear, however, that many government agencies in California believe Uber and Lyft drivers should be classified as employees.
According to a spokesperson for San Francisco City Attorney Dennis Herrera in an interview with NBC News, “To the extent that the California Public Utilities Commission takes the position that Uber and Lyft drivers are employees, they join a long list of government entities and regulators that have consistently and correctly reached that same conclusion.”
In addition to the California Public Utilities Commission’s decision, the regulator also issued a formal reminder to Uber and Lyft that they have to provide workers’ compensation for their employees by July 1. Failing to comply could result in the state revoking relevant operating authority.
Both Uber and Lyft continue to plan to overturn AB5 when it’s presented to the public in the upcoming election—as both companies maintain that reclassifying gig workers as employees would have an adverse effect on their profitability. According to Uber, “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.”
As of the publication of this blog, neither company has responded to the California Public Utilities Commission’s decision. The continued pressure on Uber and Lyft to reclassify their gig economy workers as employees has the potential to result in change—particularly if AB5 is passed in the next election.
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