[ad_1]
Now Uber (UBER) and Elevator (ELEVATOR) are betting once again on a version of this playbook as they face a heated legal battle in their home country over a new law impacting the share of the on-demand economy that ranks its workers.
The two companies said they could suspend operations in California as early as this week while simultaneously pushing for a referendum in November to exempt them from the law, known as AB-5. But industry watchers say the shutdown may not have the same impact on residents as in previous fights due to the sharp drop in ridership due to the pandemic.
“If a tree falls in the forest and no one is around to hear it, then has it really happened?” said Bradley Tusk, a venture capitalist, policy strategist and former Uber regulatory advisor. “If voters couldn’t get an Uber or Lyft when they wanted it, that’s one thing. But ridership is down so drastically, if it causes a political uproar, it will come from the drivers, not the runners. “
Threats from Uber and Lyft to shut down came after a California court last Monday ordered them to reclassify their drivers in the state as employees in 10 days. This reclassification would represent a radical change for both companies. They’ve built up massive fleets of drivers, treating them like independent contractors. This way, they were not entitled to benefits like minimum wage, overtime, workers’ compensation, unemployment insurance, and paid sick leave.
Dara Khosrowshahi, CEO of Uber, said
last week that it would be “really, really unfortunate,” but the company would “essentially shut down Uber until November when voters decide” if it can’t delay ordering until the referendum vote. Shortly after, Lyft co-founder John Zimmer said on the company’s quarterly earnings call that it would also be “forced to suspend ridesharing business in California.”
“Lyft cannot comply with the injunction by flipping the switch,” Zimmer added.
At a time when Uber and Lyft arguably have the least weight with runners, the stakes are highest for companies to mobilize support for a more favorable solution. Both companies are grappling with sharp declines in revenues from the pandemic and have a history of significant losses. Now they risk losing access to a state with an economy larger than most countries – or overhauling their business models.
Moreover, if they lose the battle in their home country, it will only encourage other states to rethink legislation relating to the economy of odd jobs.
Under AB-5, which entered into force on January 1, companies must prove that workers are free from all control of the company and perform work outside the ordinary course of business in order to classify workers as independent contractors rather than employees. Last week’s injunction is part of an ongoing lawsuit filed in May by California Attorney General Xavier Becerra and a coalition of city attorneys.
In their ideal world, Uber and Lyft would delay enforcement until residents of California vote on the referendum, known as Prop 22, which the companies have each backed with tens of millions of dollars. If passed, it would exempt Uber, Lyft, Instacart, DoorDash, and Uber-owned Postmates from the law while providing drivers with additional benefits. (The other companies are not part of the current lawsuit and therefore do not face the same delay.)
But their first attempt at appeal was unsuccessful. Thursday, a California judge denied them. Uber said it plans to appeal the order again; Lyft filed an appeal Friday with a California appeals court.
In the absence of a legal victory, the shutdown is a way for Uber and Lyft to attempt to wield the power of their apps to influence public opinion. And there is certainly a precedent for that. The companies have threatened to leave, or have left, a number of cities, including Chicago, Houston and Austin. In 2015 in New York, the company put a tab on its app to show New York cyclists what it would be like to have to wait 25 minutes for a car if the city mayor’s proposed regulation passed.
But several industry watchers have noted that Uber and Lyft may be in a weaker position this time around. Uber’s ridesharing revenue for the second quarter of this year was down 67% from the same period a year earlier. Lyft’s business also declined in the second quarter ending in June, with revenue down 61% and ridership falling by roughly the same amount.
A sharp drop in ridership due to the public health crisis can only be part of their problem in this fight. Bruce Schaller, transportation consultant and former New York City transportation manager, said the public was “much more sensitive to workers’ rights issues concerning these companies than five or six years ago,” citing the recession and pandemic, which have drawn increased attention to the plight of essential workers.
California isn’t the only legal challenge Uber and Lyft face. Massachusetts has a law similar to AB-5 and the attorney general recently sued companies for misclassifying workers. Decisions in Pennsylvania and New York on unemployment insurance also run counter to the position of businesses on employment. Last year, the New Jersey labor commissioner determined that Uber owed $ 649 million in unpaid UI premiums due to misclassification of drivers.
Terri Gerstein of the Harvard Labor and Worklife Program and the Economic Policy Institute wondered if companies could possibly pull out of other markets where their business model is also in limbo: “What’s the long-term plan ? ”
[ad_2]
Source link
