The California Court on Monday (August 10) ordered that the cab companies in the USA—Uber, Lyft— to convert the status of their drivers from “independent contractors” to employees. As part of this, the employees can now avail benefits in the state.
The judgment comes after the lawsuit was filed on the two companies that they are misclassifying the drivers as “independent contractors.” This comes in the backdrop of Assembly Bill 5, a California labor law which states that workers can be considered contractors only if they undertake tasks that fall outside the usual course.
It is being seen largely as a threat to the cab industry in the COVID-19 times when most people have been advised to stay indoors and to avoid contact with other human beings. The judge stated that the companies were directly violating the Assembly Bill 5.
However, the analyses state that if contract drivers were considered employees, the companies have extra costs to bear. There is a new responsibility for paying local minimum wage, overtime, and compensation cost of driving for the company. This means the riders will ultimately be charged more. San Francisco alone would witness a 30 per cent jump in prices.
Both Uber and Lyft have 10 days to appeal this decision.