Uber and Lyft changed the transportation industry and the options consumers had for short rides once exclusive to taxicabs. Both started small and soon grew into multibillion-dollar companies, establishing the ride-share industry while providing new and lucrative options for independent contractors/drivers working in the gig industry.
Two years ago, a ruling by the California Supreme Court may have been the first step in ending the business transactional connection between drivers and riders not only in the Golden State but throughout the United States. Instead, the state’s highest court created an employee classification that would bring contractors into the employee fold.
As both companies are national in scope, the issues transcend the borders of one state.
A mandatory injunction was filed to force both Uber and Lyft to immediately comply with the new state law that started on the first day of 2020. A California Superior Court judge ruled against Uber and Lyft, giving them ten days to classify drivers as employees formally. Business models that served as the foundations for both companies’ success could come to an end.
The ride-sharing giants have not backed down the from the fight and announced their plan to file an injunction to protect drivers that they assert want their independence.
Uber and Lyft are taking multiple legal avenues to survive under their current independent contractor matrix while acknowledging the needs for worker concessions. They are pursuing options at the appellate court level and putting the decision in the hands of California voters via Prop 22 that would exempt them from the new state law and help keep the gig economy alive.