Appeals court grants Uber and Lyft an extension after threat to leave California

Uber NYC

California grants extension to Uber and Lyft to continue to operate in California after dispute over whether drivers should be considered employees or contractors.

Analyst have been crunching data, and have come up with an analysis on what would happen if drivers were reclassified in California. According to the company, passengers could expect to see prices go up 15% to 120%, and tens of thousands of drivers might be out of work.

Uber currently employed 209,000 drivers as contractors in the state of California. Uber predicts that if the law changes it would be forced to unemployed 76% of these drivers. Uber also mentioned that the rural areas would be the most affected.

“Shifting to an employment model would force us to limit the number of people who could drive on Uber in order to manage costs that are fixed per employee,” the company stated.

Currently, most gig economy companies classify their workers as independent contractors which allows them to bypass having to provide benefits. This means that companies aren’t responsible for benefits like health insurance, sick leave and minimum wage. California passed a law last fall mandating that gig workers be classified as employees. Law AB 5, went into effect on Jan 1.

On Tuesday, Democratic presidential candidate Joe Biden weighed in, saying on Twitter that “gig economy giants are trying to gut the law and exempt their workers. It’s unacceptable. I urge Californians to vote no on the initiative this November.”

In 2018, New York instituted a minimum wage for drivers and since then drivers have seen higher wages and the city expects the measure will also ease traffic congestion.

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