Landmark California Bill Could Reshape Uber and Lyft

California lawmakers just passed a bill that could reshape how companies like Lyft and Uber do business.  In fact, Assembly Bill 5 (AB5) could require gig economy workers to be reclassified as employers instead of as contractors.  

It passed with a vote of 29-11 in the Senate.

Should it now pass the State Assembly, it’ll wind up on Gov. Gavin Newsom’s desk – who has already voiced support for the bill, according to CNBC.  

When and if it’s signed, it’ll become law on January 1, 2020.

However, going forward, it could make it tougher for gig companies – like Lyft and Uber – to prove workers are not staff, while providing benefits, such as minimum wage, insurance, vacation, and sick days.  

As expected, gig companies aren’t too happy with the legislation.

In fact, they argue it could upend their business model of hiring contractors on the cheap.  

Plus, providing benefits and employee rights can make things costlier.   

At the moment, independent contractor status also affords drivers the freedom to set their own schedules, and even work for multiple companies at the same time.  Once a bill like AB5 passes, that may not be allowed. 

In an effort to push back, companies like Uber and Lyft did propose a $21/hour minimum wage for drivers in California.  Uber also said the bill could lead to it hiring “far fewer drivers than we currently support,” among other negatives, including passing costs on to consumers.

Stay tuned for more on this developing story.  It should be interesting.

At the moment, the share of Uber is up fractionally at $33.75.  Lyft is up 1% to $45.86.

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