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Will Rideshare Companies Shut Down in California?

Published on Aug 14, 2020 at 8:12 am in News.

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In response to a California judge’s ruling on classifying rideshare company drivers as employees, companies like Uber and Lyft are saying they will not be able to continue operations in the state. Uber has said the shut down could last a few months, but could also continue to over a year.

While Uber has appealed the claim, they are looking into why they’d need to shut down in the state should the court’s ruling be upheld. According to Uber, the change would cause a need to restructure the company. They would need to look at all the ways this would change their business. Because this would be a major overhaul, it would need time like months or possibly years before they’re able to operate in California again so they’re meeting state requirements.

Uber’s response to the court order shows that they aren’t prepared to make these changes immediately, but issues with driver classification isn’t a new subject to the company. This possibility that Uber drivers would be officially considered employees has been around since April 2018. On this day, the California Supreme Court set down standards for classifying employees vs. independent contractor.

It seems like Uber has not made plans or some arrangements since that time, which could have helped them with this transition now. It also points to some possible blind spots from the company. They say they’d need time to build an information system to keep track and manage their drivers, hire new staff for HR, finance and accounting, management for drivers, and recruiters. They’d also need to create and update employee handbooks, policies, and train drivers. But it seems like some of these parts of the company should have already existed.

Uber may continue to say they will shut down for a year or more in California, but there is also another major incentive that could possibly make them shorten that time or not leave at all: revenue. California holds the two of the five highest performing markets for the company, Los Angeles and San Francisco. The other areas that complete the list are Chicago, New York, and London. In 2019, these 5 markets made $10.7 billion.

While it is still unclear about the company’s future, it’s important to consider how this could impact people. Many California drivers may depend on Uber to help them make ends meet or to put some extra cash in their pocket. Losing this, along with others who regularly use the rideshare service, would have to deal with a transitional period as they got used to living without these services.

The Rideshare Law Group helps those who have been harmed in rideshare accidents. We also stay up to date on rideshare news and events. If you’re looking for more information on getting help after a rideshare accident, get in touch with us today.