Flashback to Uber's IPO in May... Deep in its filing paperwork (aka "S-1"), Uber listed a nightmare policy scenario under the "risks" section:
“Our business would be adversely affected if Drivers were classified as employees instead of independent contractors.”
That. Just. Happened... California's AB5 law (brutal name) passed late Tuesday to go into effect Jan. 1, pending the governor's signature (he said he'll sign). It requires Uber, Lyft, and other gig icons to grant full employee benefits, pay, and anniversary balloons to their drivers — that's instead of the 1099 form drivers currently get as independent contractors.
Uber's response = Not doing it... This seems destined for a legal battle. Here's how this law would be good and bad for the world:
- The Good: Uber drivers would receive reliable (and probably higher) pay, benefits, and the opportunity to unionize.
- The Bad: Uber claims it would need to schedule driver shifts, stealing their "drive when you want" freedom. The higher overall driver pay would also probably translate to higher prices for you and us riders.
Don't forget Uber & Lyft's dirty little secret... To transition from hugely unprofitable to actually make money, they've got 3 options:
- Pay drivers less (not happening with this new law)
- Increase prices for Uber rides
- Replace drivers with self-driving car technology
#2 could happen because of this new law. The pressure to get to #3 will be even greater.