Ride hailing services Uber and Lyft narrowly averted an expected shutdown in California after an appeals court gave them last minute reprieve from an order which directed them to reclassify their contractual drivers as employees. However, this decision only buys time for the companies — at least until October 13 — as the two will still have to reclassify their drivers as employees. Without this order, the two companies would have had to shutdown its fleet in California on Friday (August 21).
A California Superior Court had, earlier this month, ruled that Uber and Lyft must make their drivers in California full time employees, entitling them to paid leaves, and health insurance among other things. The case was filed because the ride hailing services had failed to comply with a landmark bill — AB5 — which was passed in California last year. It requires businesses to hire workers as employees and not independent contractors, barring a few exceptions.
AB5 is expected to disrupt the gig economy, where independent contractors don’t enjoy the same rights and benefits as do full time employees of a company. Companies like Uber and Lyft thrive by onboarding drivers as contractors and not employees, as they have always maintained that they’re a technology company and not a transportation company. However, driver unions have repeatedly protested against these companies’ business model, saying that it is difficult for them to make a living wage even if they worked overtime.
When AB5 was passed by California’s Senate Uber, Lyft, and Doordash had contributed $30 million each into a fund for a new California ballot proposal that would counteract AB5. Since then, Uber and Lyft have been successful in getting a proposition on the state’s 2020 ballot, which allows it to sidestep AB5. Called Proposition 22, it continues to classify drivers as contractual workers, but assures them minimum wage and health insurance, among other things. Labour unions, however, have continued to rally against Proposition 22.
In India meanwhile, delivery persons of food aggregator Swiggy have been staging a protest against a new payment structure put in place by the company, which the riders say has resulted in diminished revenues for them, a situation compounded by the COVID-19 pandemic. Swiggy, like Uber and Lyft, classifies its delivery persons as independent contractors.