The State of California is risking losing one of their biggest contracting firms by threatening a change to legislation. Californian Judge Ethan Schulman ruled in-favour of an injunction that would force Uber & Lyft to reclassify their workforce from contractors to employees. This would prompt a considerable influx of operational costs to both Ride-Sharing Applications in California, prompting Uber & Lyft to threaten to leave the state entirely if the order isn’t revoked.
The Chief Executive Officer of Uber, Dara Khosrowshahi, spoke with MSNBC on the legal circumstances surrounding California State Law. Sentiments declared that if Judge Ethan Schulman & the Courts don’t reconsider their position, it’ll be challenging to maintain the operational changes they’re demanding. Uber would subsequently leave the Californian market. Ridesharing in Los Angeles, San Diego, Sacramento, San Francisco, San Jose, Fresno, and dozens of other Californian cities would disappear. Hundreds of thousands will be without “Temporary Employment” if Judge Ethan Schulman doesn’t revoke the order in ten-days time.
Lyft Investors were informed on the companies position over California’s change to legislation by John Zimmer, the President & CEO. John clarified that being unsuccessful in the revoking of this legislation would force Lyft to terminate their operations in California immediately. Lyft and Uber, both leaving the Californian Market would setback the state’s employment rate by an estimated 6.4%. However, Judge Ethan Schulman has refused to revoke his injunction. He’ll wait until appeals are brought forward to his desk & then make an accurate assessment with assistance from the San Francisco Superior Court.
The State of California filed a lawsuit against Uber & Lyft in May 2020. California’s suit claims that both Ride-Sharing Applications have exploited hundreds of thousands of citizens in their state. This was accomplished by listing drivers as “Independent Contractors”, which has been determined to violate the “California AB-5 Law” that became effective in January 2020.
Independent Contractors in California aren’t required to receive health insurance, minimum wage, or paid sick leave. These drivers are also responsible for their expenses, including insurance & gasoline. Forcing Uber and Lyft to reclassify their workforce would put a substantial volume of these costs onto their corporate divisions. Uber & Lyft aren’t willing to abide by these terms, feeling targeted after 10+ of operation without any political concern to their workforce’s wellbeing.