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Uber and Lyft in California face an existential threat: Report

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Uber and Lyft published a drastic, unexpected suggestion on August 29th as a final ditch attempt to derail California legislation that could possibly explode the ride-hailing sector. The businesses pledged in their proposal that they would pay their drivers $21-an-hour (but only while on a journey), give them sick leave, and “empower” them to “have a collective voice”— a nod to drivers forming a union.

These companies have been in existence for years now. And they’ve known that their drivers have these complaints and these problems, and they’ve done nothing to address it

The proposition “will safeguard the capacity of drivers to operate on their own terms while preserving the reliable experience of rideshare on which you have come to rely,” the petition says. Most probably, it will fail.

State senators in California are in a position to vote on Assembly Bill 5, which would make the classification of employees as independent contractors more challenging for so-called gig economy businesses. If passed, the bill could force Uber and Lyft to identify drivers as staff, they could be thrown into the unknown by a move admitted by both businesses.

“Our business would be adversely affected if Drivers were classified as employees instead of independent contractors,” Uber wrote in its S-1 filing with the Securities and Exchange Commission earlier this year.

It’s intended as such if this sounds like a dire forecast. In AB5, Uber and Lyft face an existential threat. And they lose.

The businesses sent their high-priced lobbying teams to Sacramento to convince Governor Gavin Newsom and lawmakers that AB5 is going to destroy their capacity to do company in the state. But, according to the Los Angeles Times, they have now “all but acknowledged that AB 5 will pass and that the governor will sign it.”

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Click Here to read full report from TheVerge

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