California Governor Gavin Newsom has signed a law that declares employees such as Uber and Lyft ride drivers are not independent contractors but employees who are entitled to minimum wage, paid sick day and health insurance benefits.
Motorcoach operators are not expected to be affected.
The new law, known as SB5, prohibits California workers from being classified as independent contractors if their work is central to the company’s mission. It could apply to drivers, food delivery workers, janitors, manicurists, some tech workers and even strippers, legislators said.
According to Bloomberg News, “Uber has generated billions of dollars from the labor of its drivers without the expense of treating them as employees. California is poised to disrupt the business model and the ride-hailing behemoth is gearing up for another legal fight.”
Uber, Lyft and other companies are reportedly planning to spend $90 million to $100 million to place a referendum on the state’s 2020 ballot in an attempt to overturn the law.
If the ride-sharing companies cannot evade the law, Bloomberg reported, “Increased labor costs will likely mean higher fares for riders, which could undermine growth strategies for Uber and its chief rival, Lyft.”
“SB5 won’t have an effect on bus companies because most full- and part-time drivers are hired as employees,” said Dan Eisentrager, chairman of the California Bus Association legislative committee.
