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From my understanding, the shutdown is to avoid classifying drivers as employees. Nothing has to change except Uber/Lyft having to pay payroll taxes and provide

From my understanding, the shutdown is to avoid classifying drivers as employees. Nothing has to change except Uber/Lyft having to pay payroll taxes and provide benefits for drivers working full time hours. It has nothing to do with flexibility. It's about a shifting tax burden. This shift may make the business model unprofitable without significantly raising prices.

deleted 6y ago
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lhorie 6y ago
Well, it's not "nothing". It requires having an HR org that is able to process some 50k extra headcount, among other things. The companies already stated that hypothetically, they would hire drivers and raise prices if it came down to having to use an employee model in California, but the case they're making is that while that scenario won't be a fatal blow to them, it'll severely suck for riders and drivers.
kelnos 6y ago
If the business model can't be made to work when they have to pay payroll taxes and provide benefits, then shutting down is the only reasonable thing to do. I expect it's both: they cannot or do not want to change their business model to account for the new reality, and are also hoping that a full shutdown will make voters angry enough to get AB5 repealed. (I'm not convinced that's actually the case, though, but I don't know the math around this, so it could be.)
- lhorie 6y ago
  I read that some 41% of people support prop 22 as of today, vs some 26% against (and 34% undecided)[1] I feel like a shutdown would certainly bring it to the top of mind for people and help convert the undecided, but it already looks like it'll pass, shutdown or not. [1] https://redfieldandwiltonstrategies.com/california-proposition-22-voting-intention-9-august/ https://redfieldandwiltonstrategies.com/california-propositi...
tathougies 6y ago
Completely false. If classified as employees, Uber and Lyft are suddenly completely liable for anything their employees do while working. They would have to do things like start taking inventory of their vehicles, start collecting employment verification documents, start setting up payroll, figure out how to not use their surge pricing model and switch to something else, etc. Even if you wanted to classify everyone as employees tomorrow, there is a huge administrative hurdle to overcome.

deleted 6y ago

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lhorie 6y ago

Well, it's not "nothing". It requires having an HR org that is able to process some 50k extra headcount, among other things. The companies already stated that hypothetically, they would hire drivers and raise prices if it came down to having to use an employee model in California, but the case they're making is that while that scenario won't be a fatal blow to them, it'll severely suck for riders and drivers.

kelnos 6y ago

If the business model can't be made to work when they have to pay payroll taxes and provide benefits, then shutting down is the only reasonable thing to do. I expect it's both: they cannot or do not want to change their business model to account for the new reality, and are also hoping that a full shutdown will make voters angry enough to get AB5 repealed. (I'm not convinced that's actually the case, though, but I don't know the math around this, so it could be.)

lhorie 6y ago
I read that some 41% of people support prop 22 as of today, vs some 26% against (and 34% undecided)[1] I feel like a shutdown would certainly bring it to the top of mind for people and help convert the undecided, but it already looks like it'll pass, shutdown or not. [1] https://redfieldandwiltonstrategies.com/california-proposition-22-voting-intention-9-august/ https://redfieldandwiltonstrategies.com/california-propositi...

tathougies 6y ago

Completely false. If classified as employees, Uber and Lyft are suddenly completely liable for anything their employees do while working. They would have to do things like start taking inventory of their vehicles, start collecting employment verification documents, start setting up payroll, figure out how to not use their surge pricing model and switch to something else, etc. Even if you wanted to classify everyone as employees tomorrow, there is a huge administrative hurdle to overcome.