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Uber and Lyft Are Now Not Required to Classify Drivers as Employees

By: Noah Shulman

https://www.cnn.com/2020/11/04/tech/california-proposition-22/index.html

Wednesday November 4th, 2020

To give a background on the issue, in California a recent proposition was on the ballot this election. The proposition proposed requiring Lyft and Uber to classify drivers as employees of the company. Currently, drivers who use Uber’s and Lyft’s platforms are classified as independent contractors of the company. This has been the case since the company was founded. It is also the way other crowed sourced apps like food deliveries companies work. 

Looking at the current situation, this proposition in the recent election passed. This means that Uber and Lyft can continue to classify drivers as independent contractors. This proposition confused people because voting yes meant drivers will be classified as contractors and voting no meant they would be classified as employees. Further, ride-sharing companies spent over $200 million on this ballot. This made it the most money ever spent on a ballot initiative. Thus, it shows the power business can have on government policies. Additionally, after the proposition passed, Uber and Lyft stocks soared by 11%. This is likely because this proposition will help Uber and Lyft save money in paying drivers less. 

This proposition has a big impact on the business world. First, this proposition was seen as a big win for Uber and Lyft in California. It is very likely the Uber and Lyft will continue this strategy and attempt to get a similar law passed in other states. It is also important to note that now in California Uber and Lyft will not receive benefits traditional employees receive when working for a company. For example, they will not be required to be paid minimum wage, sick leave, insurance, and the right to unionize. 

When looking at the situation, I thought that is worth considering is that if this proposition did not pass, would it have affected drivers who drive for both Lyft and Uber. From personal experience, I have driven with a driver who told me he works with both Lyft and Uber. If we required Uber and Lyft to make their drivers employees of the company, would drivers be able to work for both companies? Another thought is if Uber and Lyft had to make the drivers employees, would the cost for customers to increase? That last thought that is worth considering is that if Uber and Lyft were required to make drivers employees, would they be treated better? 

This story relates to the class because it talks about the role business plays in the government. In this case, businesses spent large portions of money to influence the way the voters voted for an issue important to the business. It also relates to the class because it talks about employee’s rights and workplace issues. In this case, Uber and Lyft prevented drivers from obtaining the right and benefits from working for the company. 

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