There has been a new order from a California judge that states Uber and Lyft need to classify their drivers as employees. The rideshare companies are against this because of the cost and insist the drivers want to keep the classification as independent contractors because it offers them more flexibility. On the other hand, this classification also prevents the access to benefits like health insurance and workers’ compensation.
While Lyft has filed an appeal to contest the ruling, their presence in California remains uncertain. If their appeal fails, they may leave California because of the associated costs. With the employee classification, rideshare companies would be responsible for much more. Employees would need to be paid minimum wage, compensation for overtime, reimbursement for the costs of driving for these companies, and paid rest periods. These would be major changes for the current system.
Unfortunately, rideshare companies are also significantly struggling because of the pandemic. With more people working from home and still avoiding going out to shop, eat at restaurants, or just get out of the house, the rideshare companies are seeing the consequences in numbers. Lyft’s ridership fell by 60% this quarter, which is a comparative 8.7 million users now vs. 21.8 million users last year. The net losses for the second quarter totaled $437.1 million.
Additional struggles that Lyft has include their lack of food and grocery delivery services, which Uber does have in place. Lyft focuses on their modes of transportation: vehicles, bikes, and scooters. With less people using their services and the costs of having the drivers as employees, there is a possibility that Lyft could stop its services in the Golden State.
But this isn’t set in stone just yet because there’s a back-up plan. There is a ballot that could overrule the order that classifies those who work in the gig economy as employees. It’s called Proposition 22 and it’s backed by Uber, Lyft, and DoorDash. It’s up to the citizens of California to vote on this ballot in November. So, those who agree that gig economy workers should be classified as employees can vote against the bill, and those who want to override the ruling can vote for Proposition 22.
While the future for these companies are still unknown, it’s important to stay updated on these companies. If you’re looking for further rideshare news or have any questions regarding an accident involving a rideshare company, the Rideshare Law Group will keep you up to date on current rideshare news. Get in touch with our office if you believe you may have grounds for a legal claim against a rideshare company. We can help you move forward.