The California Public Utilities Commission (CPUC) is the state government agency responsible for licensing and regulating some transportation companies, such as Uber and Lyft,media reported. The commission formally ruled Tuesday that drivers of the companies would be formally treated as employees, a decision that is in line with the state’s new AB5 law. Given that the two companies have long opposed the reclassification of key employees, it is unclear what material changes the ruling, which defines drivers as employees, will be.
However, California regulators last week issued a formal reminder to both companies that they must compensate employees by July 1. Under California law, authorities could consider revoking their relevant operations if they do not comply. Last month, Attorney General Xavier Becerra and city attorneys from San Francisco, Los Angeles and San Diego indicted both companies on suspicion of violating AB5 rules.
“We have always maintained that Uber and Lyft are misclassifying and exploiting their drivers, and we intend to prove that in court,” said Meiling Bedard, a spokesman for San Francisco city attorney Dennis Herrera. “
Uber and Lyft did not respond to questions raised by the email, but issued a statement. “Uber is committed to expanding the benefits and protections of drivers,” Davis White, an Uber spokeswoman, said in a statement. If California regulators force the company to change its business model, it will affect our ability to provide reliable and affordable services and threaten the vital jobs on which Californians depend. “
Asked to elaborate on why jobs were threatened, White referred to a summary of a report released in May 2020 by a company called Berkeley Research Group. If Uber and Lyft reclassify drivers, it would reduce the number of drivers by 80 to 90 percent, the summary said. However, the four-page summary does not fully explain its analysis, and to date, Berkeley has not provided a copy of the full report.
Similarly, Lyft spokesman CJ Macklin sent a brief statement saying that “the CPUC hypothesis is flawed” and declined to elaborate further.
For years, Lyft and Uber have said they would have a negative impact on their profitability if they were forced to reclassify their employees. In addition, the two competitors have been touting this special work arrangement as an additional benefit to attract drivers. However, one of the most important disadvantages of this model is that drivers have to bear a large amount of work costs, including gasoline, gasoline maintenance costs, insurance and so on.