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Labor Department Proposes Rule To Grant Gig Workers Employee Status

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On Tuesday, the Labor Department revealed a new proposal that would make it harder for companies to classify workers as independent contractors rather than employees. This rule would impact the on-demand economy, which includes companies like Uber and Lyft.

Workers granted employee status qualify for benefits and protections like paid leave, minimum wage and overtime pay. Employers would also have to contribute to a portion of worker Social Security taxes and unemployment insurance.

Labor Secretary Marty Walsh spoke about the significance of the proposed rule in a prepared statement.

“While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers. Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages. The Department of Labor remains committed to addressing the issue of misclassification.”

Labor Unions have long urged the Biden administration to scrutinize industries that rely on contractors, including app-based ride services, food delivery services or freelance task platforms like Handy, which connects customers with house cleaners and other home-improvement specialists.

Fair labor advocates stress that gig economy workers face more barriers to unionizing and cannot take advantage of essential benefits afforded to workers classified as employees.

The Labor Department said this misclassification is rampant in several industries, including home care, janitorial services, delivery, trucking and construction services. The misclassification also makes it difficult for businesses to compete with those that misclassify workers as contractors by promoting wage theft.

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The proposed rule is a test that determines whether a worker who is economically dependent on a company should have contractor or employee status. It takes into account factors such as the level of control workers have over how they do their jobs or how many new opportunities they have to increase their earnings by offering new services. Workers who have limited control over either are deemed employees. The rule also requires employers to consider if an employee’s work is an integral part of their business.

It is important to note that the rule is interpretive and does not have the legal force of a congressionally approved regulation. It also only applies to laws the Department of Labor enforces, such as the federal minimum wage. State agencies and other federal agencies like the IRS would still be able to use their own criteria for employment status.

However, employers and regulators will likely consider the proposed rule as guidance for deciding on how to classify workers. Judges will also likely look to the test as a guide.

Patricia Campos-Medina, executive director of the Worker Institute at Cornell University’s School of Industrial and Labor Relations, considers this new move from the Biden administration a big step.

“This is a long-awaited determination that will empower essential workers to assert their basic wage and hour, health and safety and compensation rights. All workers are entitled to these rights, but employers easily avoid them by making arbitrary decisions on independent contractor rules.”

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The Biden administration’s rule would replace the Trump administration’s guidance on worker classification. The previous administration’s guidance made it easier for companies to misclassify workers as contractors. The new proposal will likely face opposition from businesses and organizations that supported the previous rule.

According to The Hill, Uber and Lyft stocks fell around 14% after the announcement. The new proposal could also increase labor costs for gig-based companies by about 30%.

CR Wooters, head of federal affairs at Uber, claimed this does not imply an inevitable negative outcome for the company.

“Today’s proposed rule takes a measured approach, essentially returning us to the Obama era, during which our industry grew exponentially.”

Uber App on Phone

Uber Reaches Deal With Yellow Taxis In NYC

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Over the course of history, unthinkable partnerships have been made. Rocky Balboa trained with Apollo Creed. Tom and Jerry stopped fighting every once in awhile. Now one more can be added to the list: Uber and yellow taxis.

Due to a shortage in drivers and an upsurge in food delivery requests, Uber will now be listing New York City taxis on their app in an attempt to benefit both parties, which have had a heated rivalry since the transport company’s debut now over a decade ago.

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While the Wall Street Journal noted that this isn’t the first time Uber has partnered with taxis — both overseas and in several U.S. cities where Uber users can book taxis if cab drivers choose to be listed on the app — it is the first citywide partnership in New York City. The deal is expected to start later this spring.

As part of the agreement, the New York City Taxi and Limousine Commission’s (TLC) technology partners will integrate their apps (of which the nearly 14,000 taxis in NYC use) with Uber’s. According to Uber, passengers will pay the same fare for a taxi as they would an Uber X, typically the cheapest Uber option available.

Uber drivers receive a minimum time and distance rate set by the TLC, though Uber says drivers typically receive more than that rate and that cab drivers who take Uber passengers will earn the same. According to the labor group Intellectual Democratic Workers Union (IDWU), the average NYC Uber driver makes $25.91 per ride and can make up to nearly $80,000 gross income per year before taxes.

Of course, taxis are different because of their metered rate, so cab drivers will see expected earnings before a ride and can decline rides they don’t feel are worth it, Uber said. Following the news, Uber’s shares rose 5% to $34.70 on Thursday.

The company previously saw a year-over-year revenue growth of $5.8 billion (83%) in 2021, along with a YoY gross booking growth of 51%. They anticipate gross bookings in the first quarter of 2022 to grow from $25 billion to $26 billion.

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“It’s bigger and bolder than anything we’ve done,” Uber’s Global Mobility Chief Andrew Macdonald told WSJ. For Macdonald and co., however, NYC is only the beginning. By 2025, the company wants to have every taxi in the world listed on its app. “It’s certainly ambitious, [but] I certainly think it’s possible.”

Uber’s introduction was a piercing thorn in the side of taxis, and would eventually change the way the transportation industry was played. From Uber’s pricing system to their “easy as tapping a button” business model, along with a bevy of ride options, taxi groups have worked to ban the app or limit their impact through laws in numerous countries.

For cab drivers, this deal could also be looked at as a necessity. The COVID-19 pandemic left many taxis barely hanging on, and with rising gas prices — the national average sits at $4.2 ($4.3 in NY) — business by way of any mean was needed.

Uber Lyft

Uber And Lyft Now Adding Fuel Surcharges To Rides As Gas Prices Continue To Rise 

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Uber and Lyft announced this week that customers will be paying more for rides temporarily, as both companies are now adding a surcharge to deal with the rise in gas prices nationwide. 

In a statement made to the media, Lyft said that the company is asking riders to pay a “temporary fuel surcharge” which will go directly to the drivers as a means of compensation for the rise in gas prices nationwide. 

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“We’ve been closely monitoring rising gas prices and their impact on our driver community,” a company spokesperson said.

The company didn’t specify how much the surcharge would be, but it will likely be dependent on the length of the trip for the rider. Uber announced last week that they would also be adding a surcharge on all Uber trips and Uber Eats services for the next 60 days. After that, the company will reassess the charges. 

“We know that prices have been going up across the economy, so we’ve done our best to help drivers and couriers without placing too much additional burden on consumers,” Uber said in a statement.

Uber customers will be paying a surcharge of either $0.45 or $0.55 on every trip, while Uber Eats deliveries will now include a charge of either $0.35 or $0.45 on each order, depending on the location of delivery. 

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Uber said the surcharges will also go directly to the drivers. Uber also clarified that the surcharge will not apply to rides that begin in New York City of Uber Eats deliveries within the city’s limits because drivers there are receiving a 5.3% increase to the city’s minimum earnings standard for the past month. 

Following Russia’s invasion of Ukraine, gas prices have risen exponentially all around the nation. Uber and Lyft have both stated that the rise in fuel prices is the reason they’re both implementing the surcharges into their ride policies. 

As of this Monday, the average cost of a regular gallon of gas has reached $4.325, according to AAA. That price reflects a 26 cent increase in the past week alone.

Around this time last year the average price for a gallon of regular gas cost around $2.859. 

President Biden announced a ban on all US imports of Russian oil and gas, a move that he acknowledged would likely cause the price of gas to increase nationwide. Biden also pledged to do everything in his power to not have the rise in gas prices impact Americans and their wallets. 

“Defending freedom is going to cost, however, it’s going to cost us as well in the United States,” Biden said.

Uber Lyft

California Votes To Exempt Uber And Lyft From Gig-Work Law 

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To the dismay of contract drivers throughout California, a ballot measure was passed that exempts ride-sharing companies, like Uber and Lyft, from treating their drivers as actual employees. For tech companies, this vote is a major win in terms of protecting their business models, but for gig-workers, it means being paid the bare minimum without any of the benefits. 

The ballot measure was referred to as Prop 22 and was authored by Uber, Lyft, Doordash, and Instacart. The measure claimed that the companies would be exempt from AB5, a landmark California labor law that appeared years of constant complaints from driver-organizations who wanted to be treated as actual employees. 

Under Prop 22, the drivers for these companies will continue to be classified as contractors, or gig-workers, which removes them from having access to rights like minimum wage, unemployment benefits, health insurance, collective bargaining, union work, etc. Essentially, it means that the gig companies have full control over its employees earnings and rights.

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The fact that America is in the middle of one of the worst economic crisis’ in history as a result of one of the most deadliest pandemics the world has ever seen, has a ton of workers throughout the nation fighting for their right to live, and not work in the middle of a global health crisis. Especially considering how much money companies like Uber earn in a given year, billions, gig workers are fighting for a chance to be given even the most basic of worker rights. 

The companies made their argument by claiming that enforcing AB5 would cause “irreparable harm to their business model.” The “harm” that the companies are referring to would be actually paying their employees a regular salary and providing riders with more low-cost rides, which would thus increase business as well. 

The corporations involved in Prop 22 spent over $800 million on the campaign, leading to a slew of online commentary regarding the irony of multi-billion dollar companies not wanting to pay their employees minimum wage so badly that they spend hundreds of millions on a campaign against it. This spending, however, is what led to their win, according to Steve Smith, a spokesman for the California Labor Federation. 

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“Despite all our efforts, at the end of the day our messaging was drowned out by the campaign’s massive spending. They have extraordinary resources that they’ve indicated that they’re willing to utilize in other states outside of California, which is a huge concern.”

Labor advocates throughout the nation are worried that California is setting a dangerous precedent for gig workers across the nation. Especially considering we’re in the middle of a pandemic where many individuals are picking up gig work to help their households financially, the fact that these corporations are trying to drain even more money from their lower class employees is dumbfounding. 

New York Governor Andrew Cuomo recently spoke on this issue, stating that he wanted to introduce legislation that would make sure all workers in the state have necessary protections and benefits. “Many of the gig economy workers are excluded from the progress New York has enacted because the law has not caught up with changes in the economy. Corporations avoid fair pay and benefits, increasing their profits at the expense of the employee and the taxpayer.” 

Beyond that, current president-elect Joe Biden and vice-president-elect Kamala Harris both publicly opposed Prop 22 during their campaigning, and promised to create a federal version of California’s AB5 law that would aim to protect gig workers everywhere so they’re given the same opportunities and benefits as any other employee in America. 

Uber App

Uber Rides Take Economic Hit Amid Pandemic While Uber Eats Thrives 

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It makes sense that citizens would feel less comfortable than usual getting into a Uber that they know has been sat in by countless other customers in the middle of a global health crisis. Uber rides in general have still been occurring with stricter health and safety procedures enforced throughout the past few months, however, overall business is way down for the riding division of their company. 

The company’s goal pre-pandemic was to be “profitable on an adjusted basis before the end of 2021,” according to executives. They planned on meeting this goal by making accurate cuts to certain annual costs while also maintaining a strong balancing sheet in regard to fund distribution throughout Uber Technologies’ many departments. 

Thanks to the pandemic, however, in the second quarter of this year Uber reported an adjusted loss in earnings of $837 million while shares dropped by 2.9%. 

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In the past, Uber’s ride-hailing trips accounted for nearly 66% of the company’s total revenue. The revenue from the rides has increased 5% within the past month when compared to the drop in April, however, total gross bookings are down 75% from what it was in 2019. Dara Khosrowshahi is Uber’s Chief Executive Officer, and held a meeting for executive heads and analysts this week where she told them that if they want their rides to recover, it’s more so dependent on every country’s ability to contain the virus. 

It really is for the most part out of Uber’s hands, the same way economic recovery is out of every industry leader’s hands right now. The Coronavirus pandemic has made it relatively impossible for most businesses to run to the same extent that they were before. In Hong Kong and New Zealand specifically, ride-bookings for Uber has monumentally increased within the past month, as the two locations were both able to completely eradicate the virus from their citizens. 

“Trip requests in Germany, France, and Spain have improved like New Zealand. Our global geographic footprint remains a huge advantage.” 

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In April through June of this year Uber reported a $1.8 billion net loss, which included charges that related to laying off nearly 25% of their global workforce; which occurred during the initial height of cases in the US back in April. The United States is by far Uber’s largest market despite being located in so many other countries, so the fact that the US is also currently one of the most infected countries in the world is detrimental. 

Uber operates out of 69 countries and initially had over 99 million employees working on their own time through the app. Now, thanks to all the cuts amid the pandemic, that workforce has dropped down to 55 million employees. 

Second-quarter revenue for Uber Rides dropped 29% to $2.24 billion when compared to 2019’s second-quarter, however, Uber Eats nearly doubled their revenue to $1.2 billion. This is likely to the much greater demand for delivery food services since everyone is supposed to be staying home now anyway. Uber also announced last week that they acquired the rights to Postmates Inc., one of their greatest competitors in terms of delivery services, for $2.65 billion so that they could expand the Uber Eats business into delivering even more everyday items such as cleaning supplies, furniture, tools, and more!

Uber Eats has closed down some of the locations where they operate to make room for even more delivery services in more metropolitan areas such as New York City or Los Angeles. Uber executives in general believe that by further cutting costs they’ll  still be able to reach their 2021 goal especially with the way that Uber Eats is growing.

Tokyo Olympics

Toyota Bringing Self-Driving Taxi’s To Tokyo For 2020 Olympic Games

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Toyota is taking over the 2020 Tokyo Olympics with their newest and most innovative car technology yet. Self-driving cars have been an image of the future ever since Tesla’s got mainstreamed into the realm of vehicles; now Toyota, the largest automobile maker, will be introducing their first ever self-driving cars as cabs for individuals in Japan who will be travelling all throughout Tokyo for the 2020 Olympic games. 

The vehicles are known as “SAE Level-4 automated vehicles,” the SAE stands for Society of Automobile Engineers, and “Level 4” references this specific groups ranking for a vehicle’s advancement. Level 4 assumes that the vehicle can “perform all driving tasks under any specific set of conditions such as weather or geography,” according to The Verge. While these automobiles may have that advanced classification, Japanese law states that an individual must always be present behind the wheel of any moving vehicle, regardless of its technological capabilities. So if you’re attending the 2020 Tokyo games, don’t expect an empty car to arrive to take you to and from the games. Toyota is ensuring that while the cars will be driving themselves for the entirety of the automobiles residency in Japan, there will always be someone behind the wheel who will be ready to take control of the vehicle should it become necessary. 

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self-driving taxi trial on a test track 

“Toyota is only offering rides in its cars for a small window of time: July to September. The cars will be geofenced, meaning they will be restricted to a specific geographic area within Tokyo’s busy Odaiba district. Odaiba’s complex environment of pedestrians, vehicle traffic, diverse road infrastructure and tall glass buildings provide a challenging setting in which to demonstrate the capabilities of Toyota’s automated driving technology,” Toyota said in their official press release regarding their Level-4 vehicles.  

The Toyota Research Institute, based in Silicon Valley, has been testing these vehicles for this specific event for a few years now, (Verge). For the tests the group traveled to Ottawa Lake, Michigan in order to have a large enough space to prepare. In Michigan, engineers and researchers created a closed-course facility that exactly replicated Odaiba districts most challenging driving characteristics and common driving scenarios. They spent their time in Michigan specifically ensuring that these Level 4 vehicles were equipped and prepared to handle a multitude of conditions once actually in Japan. 

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The specific technology from Toyota is known as their “Chauffeur” software, which executives described in the press release as “focused on full autonomy, where the human is essentially removed from the driving equation, either completely in all environments, or within a restricted driving domain.” The “premiere” of these vehicles to the public being specifically for the Olympics, which are being held in the homeland base of Toyota, is also meant to put a spotlight on the companies new long lasting and advanced batteries for their electric vehicles. 

Toyota also said it will be providing “3,700 mobility products and/or vehicles for the Olympics, 90 percent of which will be ‘electrified.’ That can mean either battery-electric, hydrogen-powered, or even gas-electric hybrids. Of the 3,700 vehicles, 850 will be battery-electric and 500 will be fuel-cell electric.”

Finally, Toyota reminded crowds that last year they made a massive business deal with the company Uber. Toyota agreed to invest $500 million in a joint self-driving project with Uber. The two companies are now working together to make self driving cab cars the new wave of the future, why buy an expensive self driving car when you can just order it for the day? 

Scooter

Is the Urban Millennial Lifestyle Sustainable?

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If you walk into any major urban center in America, you’re bound to find young people glued to their smartphones. But they’re not always just texting or checking up on social media — they’re also taking advantage of a wide range of lifestyle apps, which offer everything from ride-sharing services to online shopping to rewards for engaging with local businesses. Most of these apps, which are generally available cheaply or for free, are created by businesses started in Silicon Valley, where implementing a unique idea and cultivating an audience is often considered more important than generating profits. These consumer tech companies are generally funded by wealthy investors looking to capitalize on the explosion of technology present in the everyday lives of millennials, effectively subsidizing the products in question and enabling an artificially low cost for the consumer. But the venture capitalists who make this app-centric lifestyle possible are effectively placing a bet on the long-term financial viability of the innovative businesses they invest in, with potentially disastrous consequences for everyone involved.

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Any number of examples of these apps, produced by businesses that are not currently making a profit and perhaps never will, come to mind. Casper, a mattress company that operates online and ships compressed mattresses directly to customers’ homes, is expected to lose money this year, as are the tremendously popular Uber and Lyft ride-sharing platforms. DoorDash, a service that delivers food from a variety of eateries, is not profitable, and neither is Seated, which gives discounts to restaurant-goers. Perhaps most notably, the platform WeWork, a business that rents out office and living space to small businesses, recently attempted to go public, a disastrous decision that resulted in financial turmoil for the company after potential investors raised concerns about the company’s path to profitability and its’ CEOs questionable antics, which included smoking marijuana on a private jet and serving tequila shots to employees after discussing layoffs. Amidst this controversy, Adam Neumann stepped down from his role of CEO of the company, and WeWork’s future remains unclear.

In general, companies such as these provide non-essential goods and services, offering their customers convenience for an affordable price rather than the necessities of life. This convenience is made possible by technology, as smartphones are always connected to the internet and provide companies with information such as a user’s location and other details that are used in innovative ways. Nevertheless, they are built upon attractive and enticing ideas, which capture the attention of investors who rely upon their trust that the companies’ ingenuity and creativity will eventually lead them to make a profit.

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Ironically, the most popular online businesses tend to be the least profitable, in what is likely to come as a surprise to their millions of daily users. The well-known Blue Apron, for instance, spends roughly $460 to recruit each of their customers, despite making only around $400 on each customer, as they are likely to cancel their subscriptions after only a few months. As a result, investors quickly realized that the meal-kit company had no viable path to profitability, and the company’s valuation dropped by over 95% since they went public. Because Blue Apron refuses to increase the price of their services, they are unable to demonstrate value to investors, leading to serious financial problems for the company. While Blue Apron may be considered an extreme example, the underlying business model, wherein companies supported by venture capitalists reduce their prices in order to generate an audience, is prevalent throughout entire industries.

The artificially low prices of these new businesses perhaps explains the extremely-connected and online relationship millennials have with tech-savvy startups. But, as companies like WeWork and Blue Apron fail spectacularly despite their large audiences, business leaders are starting to take note. One of the solutions to this inherently problematic business model is simply to raise prices for services in an attempt to generate profits for increasingly impatient investors. But competition is fierce, and millennials are a fickle demographic. Companies that raise prices of services, even if just to break even, risk alienating their base of consumers, who may be drawn to particular products or services for their low prices rather than for their practicality. For instance, if a company that lets customers rent bicycles with their phones raises their prices, consumers may realize that it becomes more economically viable for them to simply purchase their own form of transportation. As income inequality rises and wages remain stagnant, particularly among the millennial class of workers, companies are faced with the difficult choice between continuing to operate at a loss by benefiting from increasingly-wary investors, and raising prices for non-essential goods and services that their consumer base may increasingly be unable to afford.

Uber

Uber’s New Helicopter Service Is The First Step To A World Of “Air Taxi’s”

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If you live in the New York City/Long Island area, then you surely understand the struggle that is getting to JFK. No matter what time you leave your house, there always seems to be a mess of traffic and congestion at every terminal. If you live in Manhattan you need to plan your airline commute hours in advance.

As of the past few years, ride-sharing apps and services have been the main source of transportation for New York City residents, especially when it comes to getting to their terminals on time. Uber, being one of the most popular, is widely praised on its Uber Pool feature that allows cheaper shared rides amongst different people travelling to the same location or locations within the same proximity as each other. However, the 9 year old company wanted to up their game even further, so they created Uber Copter, which is exactly as awesome as it sounds. 

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At the beginning of the summer Uber announced it’s helicopter transport system for its Uber Rewards Members exclusively, and now, as of October 3rd, it’s available to the general public, no membership required. As of right now, the only location that this specific ride-calling service can be used for is for getting to JFK airport, and you have to be in Manhattan to call for it. The total time spent getting to JFK is supposed to be no more than eight minutes in the air, and depending on how high demand the day is, it’ll cost between $200 – $225, which also includes regular Uber car service to get to the helipad locations. This major addition to the Uber personal transport system is one big step towards a greater goal of including tons of means of transportation that can be called using the app. Uber also intends on adding bikes and scooter to its app, and is in the preliminary phases of testing self-driving cars, however, after a fatal accident during the initial testing period, Uber is putting that idea on hold. 

Uber Copter may or may not save you time depending on how far you are from a helipad location. One user claimed it took them 70 minutes to get from their office in Midtown Manhattan to get to JFK because they had to take multiple car services to get to both helipads. Uber has said that travel times will begin to decrease as they run the service more and gain greater access to more heliports throughout the city. As of right now the helicopters are only leaving from a single helipad located near the Staten Island Ferry port. As they further develop Uber Copter, they will also continue to build Uber Air, which is the big picture business service Uber is attempting to provide. 

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“Uber saw the service as a way to work on Uber Air, the company’s upcoming electric air taxi service. We’ve built Uber Copter to provide us with insight and real-world experience as we continue to lay the foundation for Uber Air. We plan to launch Uber Air in Los Angeles, Dallas and Melbourne, Australia in 2023,” said a company spokesperson to Engadget Online Magazine. 

Uber has already partnered with multiple aircraft businesses in an attempt to work out all the specifics that would come from creating a totally new and innovative air taxi service. The company has also already debuted a prototype of the aircraft they would want to use that they built with the aircraft company Bell. 

“These aircraft use four vertical fans for lift and a separate propeller for forward thrust. They’ll be able to carry four passengers plus a pilot up to 60 miles on a single battery charge at speeds in excess of 150 MPH. These aircraft are likely to begin flight tests next year in the skies over Dallas, Los Angeles, and Melbourne,” according to Engadget. 

Uber Copter is just step one in a much larger plan for Uber to take to the sky, currently multiple companies are in a race to see who can get their transport services to take to the sky. Uber has accomplished the feat of being the first to offer helicopter personal call service transport, so maybe Uber Air is closer than we think.

Uber

New California Legislation Forces Gig Economy Companies to Treat Workers as Employees

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The explosion in popularity of services such as Lyft, Uber, and DoorDash has given rise to a new type of occupation, where workers make their own hours and can use their personal vehicles as part of their job, but are beholden to the operation of a smartphone app instead of working for a traditional employer. These workers, in the so-called “gig economy,” are currently legally classified as contractors, not employees, meaning they lack the protections and rights granted in more traditional jobs. In California, however, that is due to change, as new legislation which is expected to go into effect on January 1st reclassifies these workers as employees, fundamentally changing how these businesses must be run in the state. This pioneering legislation, known as Assembly Bill 5, has the potential to bring about change in other states as well, as employee rights advocacy groups lobby for similar laws to be passed in states like New York, Washington State, and Oregon.

Although the app-based companies that would be affected attempted to negotiate an exemption from the bill, this attempt failed, and the bill in question passed 29 to 11 in the California State Senate. After the bill goes through the State Assembly, California’s governor, Gavin Newsom, is expected to sign the bill into law, as he endorsed the bill this month. According to the New York Times, the law would designate workers “as employees instead of contractors if a company exerts control over how they perform their tasks or if their work is part of a company’s regular business.” Classifying workers as employees rather than as contractors means they would be granted protections such as a right to a minimum wage and unemployment insurance, among other benefits. Because of the broad phrasing of the bill, several industries, including custodial services, nail salons, and construction could be affected.

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Companies that have built their business on the cheap labor afforded by contract work have fiercely opposed the bill, spending $90 million in a failed attempt to defeat it. These companies have argued that contract work gives people more flexibility and independent, and have claimed that this legislation has the potential to destroy their businesses. Although these “gig companies” have provided a tremendous amount of innovation by making it quicker and easier for smartphone users to request goods and services, they have done so by taking advantage of the loose restrictions placed on hiring contractors, many of whom complain about being underpaid, unfairly let go, or burdened by the costs of upkeep and maintenance the job imposes. Contractors for these companies, most notably ride-hailing drivers, are unsurprisingly supportive of the bill’s passage.

The passage of Assembly Bill 5 represents a major victory for contract workers for Uber, Lyft, and Doordash, who have fought for years to be classified as employees. A number of lawsuits have been brought against these companies from drivers arguing that they have the legal right to the same rights as employees, and the companies have responded by settling these lawsuits out of court. The companies have also worked to secure exemptions to rules threatening the contractors’ freelancer status in a number of states.

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While the specifics of how gig economy companies will react to the new law is unclear, it is estimated that treating workers as employees could raise costs by 20 to 30 percent, and Uber and Lyft claim that the law would require them to schedule drivers in advance, prohibiting their freedom to choose when and where to work. Experts, however, disagree, and claim that the companies are free to leave their system of scheduling workers the way that it is. Not all drivers are in favor of the bill, as they fear the law will limit their flexibility, and Uber and Lyft urged drivers to call their legislators to oppose the bill.

Reaction to the concept of reclassifying contractors as employees nationwide generally varies along the political spectrum, with people on the left praising the bill for the benefits it grants workers and people on the right complaining that the bill represents excessive government interference in the affairs of private businesses. In any case, the passage of the bill in California is sure to provide a valuable test case for how similar legislation in other states would impact workers, businesses, and consumers.