Uber and Lyft to close in California

Getting home from a party may soon be more difficult for California Lyft and Uber users. Both transportation applications will cease their services in the US state, in response to a San Francisco Superior Court ruling ordering them to reclassify their self-employed drivers as employees.

Rendered on August 10, this judgment gives the two companies ten days to comply with a California law passed in 2019, which regulates the use of self-employed workers, on which Lyft and Uber depend. They believe that observing such rules would make it impossible for them to practice in California. Their drivers will therefore no longer be able to take races there from August 20.

This standoff is set to last until November 3, when a Lyft and Uber-backed referendum will be voted that would exclude their drivers from California's self-employed workers law. This text would allow them to continue to employ the latter to ensure their journeys, without granting them the social benefits granted to employees, such as a minimum wage, taking into account overtime and unemployment.

Lyft went so far as to rally its Californian users within its own application by encouraging them to vote in favor of the referendum.

A new status for the self-employed

At the same time, Lyft and Uber are calling for the creation of a new status. “ The current system is outdated and unfair ,” Uber CEO Dara Khosrowshahi said in a New York Times column. It forces workers to choose between being an employee, with more benefits but less flexibility, and being self-employed, with more flexibility, but almost no safety net . ”

Instead, Uber wants a " third way, " which would establish a fund specific to self-employed workers to which they would contribute individually. This fund would be transferable between apps and would fund both their health insurance and vacation time. Lyft and Uber argue that the vast majority of their drivers support such a solution.

Nonsense for California prosecutor Xavier Becerra: " What worker does not want unemployment insurance in the midst of the Covid-19 crisis? What worker doesn't want to be paid for their overtime if they work 60 hours a week or 12 hours a day? In California as in France, unions criticize the working conditions that these companies impose on their drivers. They question their business model which they believe abuses the status of self-employed worker.

Another possibility that Uber and Lyft are considering, according to sources cited by The New York Times, would be the establishment of a franchise system. They would provide customers and drivers with a software platform, but the cars would be operated by third-party companies, as Uber already does in Germany and Spain. This would allow them to distance themselves from their drivers.

For both companies, the stakes are high. The two companies have been in deficit since their creation and the Covid-19 crisis has not helped. Requalifying their independent drivers as employees would force them to increase their losses even further or to greatly reduce the scope of their services.