The state of California has voted to force Uber and Lyft to classify its drivers as employees rather than independent contractors. The idea is to impose on the company vast costs associated with medical benefits, withholding taxes, and the immense bureaucracy of employment. It’s a fundamental attack. It upends the whole business model. Nor is there any evidence that the drivers themselves desire this. These drivers famously pride themselves on their flexibility and independence.
If other states adopt this law, the future for ride sharing in the U.S. could take a turn for the worst. Already, there are deeper problems with the growth strategy and profitability plan for the future. Margins are already thin in this exciting and innovative industry. Imposing more regulations could be ruinous.
Here are my thoughts on this topic, in video form, based on an article by Max Gulker.