Uber Pledges to Fight California Contractor Bill

Uber is already fighting a landmark California bill that demands companies reclassify contractors as employees if the so-called contractors participate in the company’s “regular business,” perform their services under company control, and do not otherwise earn a living conducting the kind of business they do for the company. Governor Gavin Newsom is expected to sign the bill into law. It would go into effect in January.

Uber Chief Legal Officer Tony West told the Wall Street Journal the bill does not automatically re-classify ride-share drivers as employees. “AB5 does not provide drivers with benefits, nor does it give drivers the right to organize,” West said. “In fact, the bill currently says nothing about ride-share drivers.”

Yet ride-share drivers participated in the fight to pass the bill, and the basic requirements the law lays out for contractor work appear to be contradicted by Uber’s business model. Ride-share drivers are not just part of Uber’s regular business; they are the core of it. They would also struggle to operate as contractors in the ride-sharing business without the companies, including Uber and Lyft, that pay them as contractors to do so.

Uber and Lyft are already losing billions of dollars, and long-term concerns about whether they will ever hit profitability have endured, making for relatively weak runs on the public market. If the companies cannot come close to profitability with cheap labor forces without benefits, having to treat drivers as employees could pose an existential threat. At the very least, it may require Uber and Lyft to slow down expansion and rein in their ambitions, suggesting that the heyday (or hallucinatory days) of Web 2.0 could be coming to a close.

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Joe Zappa is the Managing Editor of Street Fight. He joined Street Fight as a contributing writer in 2015, has compiled the daily newsletter since 2016, and has spearheaded the newsroom's editorial operations since 2018. Follow him on Twitter @joe_zappa, and shoot him an email at jzappa@streetfightmag.com.
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