A California court ruled that Uber and Lyft should classify their drivers as employees rather than independent contractors. Is this just a meaningless title change?
The differentiation is actually quite significant. Employees are required to be granted numerous rights such as sick days and health insurance, and their compensation contributes to state payroll taxes. However, independent contractors are not granted such rights, and their compensation is not taxed in the same manner.
California sued the companies in May because of a new gig-economy law that attempted to extend protections and regulations to more of the labor market.
Both companies have argued they are not transportation companies, but they are a service to connect riders and drivers. Uber has begun testing a feature where drivers can set their own fares in an attempt to strengthen the case that drivers operate with a level of independence.
The ruling is yet another challenge for the two companies which have struggled due to the pandemic because of a decline in local travel.
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