Uber is facing an existential threat to its business model—California’s newly enacted Assembly Bill 5 (AB5). Uber and other app-based technology companies that built their business models on the backs of independent contractors now need to quickly reinvent themselves.
Lawmakers in California and other states are accusing Uber and other tech companies of trying to exempt themselves from laws by classifying their workers as contractors under false pretenses.
Regulators contend that they should be considered employees and afforded all requisite rights and privileges. In response to the new law, Uber is quickly making changes. These test-case alterations are an attempt to circumvent the current law.
This piece of new legislature could force Uber and other gig-economy and app-based businesses to reclassify their independent contractors and make them employees—unless they enact changes that conform to the law. Uber has been accused of asserting that its drivers are independent, whereas the state of California claims they are employees. The difference is not inconsequential. The amount of money at stake is massive.
Uber is trying to show lawmakers and regulators that their drivers will now have greater independence, leeway and freedoms. The company enacted new policies that will allow drivers in California to have more information about riders, so they can decide if they want to accept a customer or not. They will be made aware of the travel time, distance, destination and fare, so that the driver can make an informed independent business decision. California-based drivers may also feel free to decline a ride request without suffering any corporate-induced penalties. Uber is test marketing these new features before the rideshare company implements them across the country.
