Are You Ready for the Massive Cost Increase for Uber and Lyft Rides?

Massive Cost Increase for Uber and Lyft Rides

Have California lawmakers overstepped their bounds with AB5 — targeting those in the gig economy? See how this could impact not only Uber and Lyft, but many other businesses as well.  

You don’t have to look far to see that the traditional “American way” of working has changed dramatically. No longer are people staying tied down to corporate jobs for decades. Instead, they are working when, where and how they want — and this gig economy has thrown some businesses for a loop. California’s recent outreach to workers has the state attempting to force businesses to reclassify these human assets from contractors to employees, a move that could have far-reaching impacts on the businesses and the services that they are able to offer. As two of the largest employers of contractors, Uber and Lyft are poised to see a major impact from this shift in the way California views its workforce.

The Difference Between Employees and Contractors

At first blush, it may not seem like this is a major issue for these businesses until you consider that employees are required to receive healthcare and additional benefits that businesses simply aren’t required to provide to contractors — including worker’s compensation. This could dramatically increase the costs associated with hiring individuals to drive for Uber, Lyft, GrubHub and other short-term jobs; costs that will be passed along to the buyers of the goods and services that are being provided.

The End of the Gig Economy?

California is only the first state that’s considering this type of legislation — New York, Washington state and Oregon have already been under consideration but failed to move forward. They could be resurrected with the passing of California’s AB5 and will potentially affect millions of workers throughout the country, as well as the Americans that are purchasing from these businesses. While some experts are stating that it could mean the end of the gig economy, Uber and Lyft’s attorneys are gearing up for a protracted legal battle in hopes of deflecting the damage that California’s Assembly Bill 5 could do to their business.

This type of legislation in California may be only the beginning of massive changes to come in the US economy, as states attempt to regulate what is increasingly becoming a gig economy. At Alvarez Technology Group, we believe it’s important to keep our clients informed of technology and business changes in the economy that could impact your organization. We regularly participate in videos and add educational articles to our website to help you gain the full perspective needed to advance your business. Subscribe to our YouTube channel to stay in touch or contact us anytime at 831-200-8167 to see why our clients rave about the proactive service that they receive from our expert technicians.