A law making its way through the California legislature would require certain “gig work” companies to treat their gig workers as employees rather than independent contractors. Most people think the law is aimed squarely at Uber, Lyft and the like, but Uber claims it won’t apply to them, and there is skepticism of that.
If the gig workers are employees, a fair bit changes. They become subject to a lot of employment laws, including minimum wage laws, employee rights and benefits. They might have to be paid for the time they sit idle waiting for a ride. They might no longer have the right to refuse rides or set their own hours. Employment taxes (social security etc.) would have to be paid on their wages. They might get benefits And many more different treatments.
A source from Uber speaking to “The Information” claimed this could raise Uber’s costs by 20%. It is unclear if that means all of Uber’s costs (which is to say the 75% of ride prices they pay drivers plus the driver incentives which today exceed what Uber brings in) or just the “driver” part of the cost which could be much less. If there is a 20% increase in the full cost of a ride, this will eventually be passed to customers.