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Home / WorldTech / Is the gig economy a disaster or triumph for ride-hailing? Depends on who you ask.

Is the gig economy a disaster or triumph for ride-hailing? Depends on who you ask.



Uber and Lyft have been around for a couple of weeks, and that's not all.

After the bill, called AB5,

But drivers and other gig workers are celebrating what could be a pathway to fair pay, benefits, and other employee rights. makes its way to the governor's desk, it should go into effect on Jan. 1, 2020. It would make companies reclassify many independent contractors as employees.

While this would seem to be the case, the people who use the apps could also see changes.

The New York Times cited "industry officials" who say costs for company like Uber and Lyft could rise by 20 to 30 percent because of AB5. Other industry experts like Michael Droke, a partner at Dorsey & Whitney, California, a law firm that has been represented big companies like 3M and Wells Fargo in labor disputes, so sees costs going up for companies and prices going up for riders.

"Many industries rely on independent contractors to deliver products and services, from food to software coding and design."

Yaël Ossowski, deputy director of the Consumer Choice Center, which supports deregulation, said the law could not force people to "seek out alternatives." Car pool, hail a cab, or find a nearby bus.

For Uber and Lyft driver Jeff Perry, AB5 is a huge win. He is part of Gig Workers Rising, which has been instrumental in gathering support for the bill and is fighting for drivers to unionize.

He's not concerned that Uber or Lyft wants to go out of business or that customers will turn to other options. He said passengers will understand that they are more likely to wait.

"It's better than anything can offer or public transit," he said.

Perry thinks Uber and Lyft can innovate again in the face of a new employee structure and costs.

"I do not feel sorry for the least for Uber," he said.

He referenced an in-app message that Lyft sent out Wednesday morning in response to AB5 moving forward. He saw it as a last-ditch effort to get drivers to pressure California Gov. Gavin Newsom to veto the bill.

Aside from somewhat longer wait times and higher fares, Gary Buffo, president of the National Limousine Association, which has better support and benefits for ride-hailing drivers, does not think AB5 as a disaster.

He's seen his industry survive while following standard laboratory practices for its drivers.

"Nobody is going to see a big change at all," he said in a call Wednesday.

In Uber and Lyft's IPO filings with the Securities and Exchange Commission earlier this year, the switch from independent contractor to employee is listed as potentially ruinous.

"If the contractor's classification of drivers is challenged, there may be adverse business, financial, tax, legal and other consequences," Lyft's filing states.

In a press call Wednesday, Uber's chief legal officer Tony West said the ride-hailing company wants to give drivers rights and minimum pay standards without forcing them to become employees.

"We believe drivers are properly classified as independent," he said. As they always have. Combining forces with Lyft, Uber is backing a ballot initiative for California voters to set up a separate ride-hailing driver policy.

While unwilling to go into worst-case scenarios, West assured reporters that Uber would stick around. He even floated the possibility that nothing would change and AB5 would not raise any costs or cause any structural changes. As Gig Workers Rising's Perry said, there's undeniable value in Uber and Lyft – it just needs to be the drivers that power the service. !


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