New California Law May Hamper Uber and Lyft Drivers.
The dizzying rise of the technology that has created and fostered such ride-hailing behemoths as Uber and Lyft has left in its wake a continuing frustration and controversy about those who do the heavy lifting in the new ‘gig’ economy — the drivers and other workers who are employed as independent contractors instead of as employees.
To those outside of the gig economy, this may seem like a niggling subject to worry about. But it is actually so huge that the state of California is now about to pass a law forcing companies like Uber and Lyft to redefine their drivers and schedulers as employees — which means the companies will have to pay through the nose for things like unemployment insurance and fully half of the deductions made for Social Security taxes. This is a huge chunk of change, and so it comes as no surprise that both Postmates and Uber have filed suit in federal court to block the California law from going into effect.
Most legal experts say the law will go into effect while the courts decide on the viability of the law, but that its effect on lawmakers in other states is already apparent. Several other states are considering enacting laws that will widely redefine the meaning of ‘independent contractor’ for the benefit of freelancers in many different industries. But if the work dries up because companies can no longer afford to hire freelancers, then any benefit will become merely a legislative daydream.