Uber, Lyft ordered to classify drivers as employees
Yahoo Finance's On the Move panel discuss the latest with Uber and Lyft being ordered by California appeals court to classify its drivers as employees.
Video Transcript
ADAM SHAPIRO: California, so we had in the last hour of the story about Gene Simmons is leaving the state with his wife, because taxes are too high. Another issue people talk about are the regulations. And now that an appellate court has ruled Uber and Lyft must classify their employees, the drivers as employees, what's that going to do? Dan Howley, is this going to be a big swipe, or were those firms preparing for this?
DAN HOWLEY: I think they've been preparing for this for some time. Obviously, when AB5 was passed, there was a big issue. They challenged it. Now, the courts are saying that they have to go along with AB5. AB5 obviously is the bill that makes so-called gig economy workers, Uber drivers, Grubhub delivery people, turns them into real employees for these companies rather than just kind of freelance.
But you know, they've been preparing for this. They fought back initially. I think they've put a lot of their effort into trying to get this ballot initiative that they have, Uber and Lyft in particular, to kind of reverse this ruling from the court in this law and essentially say, you know, let these workers act as they want. There's, you know, interestingly enough, there's no consensus really from either side when it comes to the workers themselves. Some workers say that they do want to remain as freelance, and they do want to be able to operate on their own kind of accord.
The other side says, no, we want to be full time employees. We want the kind of benefits that come along with full time employment, so it'll be interesting to see how the vote goes here. It's also worth noting that, you know, the people that are going to be voting on this don't all work in the gig economy. So it's going to be kind of coming down to regular folks or folks who work full time or part time jobs telling these gig economy workers where they end up being in the long run as far as their employment status goes.
RICK NEWMAN: I love the fact that California is like a Guinea pig for the rest of the country, and they're willing to take on these thorny issues, and it's kind of cool that this is now going to be determined by a ballot measure in California. So people who are users of Uber and Lyft are going to, you know, obviously be among voters deciding what should happen here. I mean, this is a big issue for the economy at large is what to do about the gig economy.
I mean, is this OK the way it is, or do we need to establish more protections for workers so they can be treated more like full time employees? So California, as usual at the Vanguard, they're going to give us some message about how society feels about this issue. I have no clue. I haven't seen any polls or anything showing, you know, what people think about this in California. But whichever way it goes, it's going to reverberate through the rest of the country.
DAN HOWLEY: Yeah, and you know, when we first saw this, Rick, you know, Uber and Lyft were initially saying that they were going to pull out of California or stop operations. And look, that hurts the workers who are there currently. They've pulled out of cities before in the US. They've pulled out of cities before internationally. So you know, it's kind of their way of using their power to kind of swing things in their direction.
I think whatever this law comes down to, then we'll have to see what Uber and Lyft do. Because if people say, no, they have to be full time employees, then that's going to be the law of the land. And at that point, it's up to Uber and Lyft whether or not they want to stay in one of their largest territories in the US.
RICK NEWMAN: And they're bluffing, by the way. There is no way. I mean, even if this ruling goes completely against them, there is no way those companies are leaving California. I mean, that would just be catastrophic. It's as big as most countries. So to say, we can't operate in California is just not going to fly. They're going to have to figure out how to operate there.
ADAM SHAPIRO: We will leave it there, but more to be continued, right?
