Tusk Ventures CEO Bradley Tusk provides insight into Uber.
California Uber and Lyft drivers should now be classified as employees instead of independent contractors, a shift that would guarantee benefits such as overtime, sick leave and reimbursement of expenses for workers who make much of the economy for freewheeling. gig.
San Francisco Superior Court Judge Ethan P. Schulman made the ruling Monday, though it may not take long to take effect, as Uber and Lyft immediately said they would go to a higher court on appeal.
Lawyers for Uber and Lyft argue drivers are not fundamental to the company, arguing that the companies are “multi-sided platforms” whose activities involve much more than transportation. But Schulman rejected those arguments, writing in a 34-page opinion that the argument “flies in the face of economic reality and common sense.”
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“To put it bluntly, drivers are central, not tangential, to the entire Uber and Lyft business,” Schulman said.
| Ticker | Security | Last | Change | Change% |
|---|---|---|---|---|
| UBER | UBER TECHNOLOGIES INC. | 31.21 | -1.06 | -3.28% |
| LIFT | LIFT INC. | 30.65 | -0.40 | -1.29% |
The apps with ride-healing claimed that the decision threatens to shut them down during the economic downturn witnessed during the coronavirus pandemic when many people who lost their jobs became Uber and Lyft drivers.
“Drivers do not want to be employees, stop altogether. We will immediately appeal this ruling and continue to fight for its independence. Ultimately, we believe this issue will be resolved by voters in California and that they will have a site with drivers,” a spokesman said. Lift Julie Wood told Business Insider.
An analysis conducted by Uber economist Alison Stein predicted that the platform would need to increase its prices in California between 25% and 111% to cover the cost of providing benefits to drivers.
The lawsuit was filed by California Democratic Attorney General Xavier Becerra and the city attorneys of Los Angeles, San Diego and San Francisco under a new law in California that says companies can only classify workers as contractors if they work “outside the normal course “of their company.
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The companies have already challenged the law in federal court, where their efforts to stop it from importing have, so far, failed. And they have promised to spend more than one hundred million dollars to support a November referendum that, if approved by voters, would exempt them from the law.
“Our state and workers would not have to pass the bill when large corporations try to skip over their responsibilities,” Becerra said in a statement. “We will continue to work to ensure that Uber and Lyft play by the rules.”
Uber, which has more than 100,000 drivers in California, announced last week that it had lost $ 1.78 billion in the past three months because millions of people stayed home under lockdown restrictions.
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State officials have argued that Uber and Lyft’s behavior hurts more than drivers, noting that companies do not pay into the state’s unemployment insurance that covers benefits for people if they lose their jobs. The state fund was quickly pulled out after enormous job losses due to the pandemic, resulting in the state borrowing billions of dollars from the federal government.
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The Associated Press contributed to this report.
