For many years now, people working as gig drivers have been complaining about their status as workers: are they independent contractors or full-time employees? In September this year in Sacramento, Governor Gavin Newsom signed the AB5 bill which means that from January the 1st 2020, Lyft and Uber will have to make their drivers employees.
What it means for many companies using gig workers
Lyft and Uber, amongst other firms, are not happy with this result. They came forward with proposals as the law got further towards being signed by Governor Gavin Newsom. They wanted to make a new classification for people who were drivers, which allowed them some benefits of being an employee but not all of them. They met with labour groups and representatives from the Governor’s office during July and August, offering drivers minimum wage and ways to unionise, but the talks broke down.
Certainly, for the shareholders of Lyft and Uber, it isn’t good news. For the last two months, shareholders have been watching their shares diminish in value and there is no sign of it stopping. Uber hasn’t said anything about the result, but Lyft has said:
“Today, our state’s political leadership missed an important opportunity to support the overwhelming majority of ride-share drivers who want a thoughtful solution that balances flexibility with an earnings standard and benefits,” said Adrian Durbin, a Lyft spokesman.
Industry experts say the costs of this bill to the businesses will be a rise of 20% to 30%.
With the number of costs, the companies are expected to contribute, there are serious worries about their financials. Of course, with future struggles, then there will be less work for all the people who rely on Lyft and Uber as well as for companies like DoorDash (a food delivery firm) and other companies with gig-based workers.
It’s not just a problem for California. Like New York, Alaska and Oregon have all found ride-hailing drivers could be considered employees under state law and are therefore entitled to unemployment benefits. Could AB5 be the start of wider benefits in these states, too?
The crux of the problem is that all stakeholders need new forms of employee classification that are not self-evident or used before as both full-time employee or independent contractor do not fit new ways of working that are driven by the adoption of new technology. However, stakeholders are also afraid of taking action as people do not want to get into a spiral of ever-increasing managerial and legislative overhead. With PARiM however, you can use our technology to solve issues caused by new technology.
How PARiM can help you thrive in the gig economy
No matter what happens, there are significant changes happening to the gig-based economy and companies like Lyft and Uber are going to have to look at doing things differently.
One of the best ways to meet this complex set of challenges so is via partnering with us at PARiM Workforce Software as the newest update to PARiM brings functionality vital to bridging the gap between legislation and business operations: an ability to add custom employee classifications and pay schedules that allow keeping an up-to-date HR database. See the comprehensive video intro:
PARiM is the ideal partner because the main worry for legislators and firms alike is the overhead that comes with creating additional employee classifications. This is something that a tool like PARiM completely eliminates. Setting up a custom employment type only takes moments and ongoing management is unbelievably easy as you can filter your people by different classifications in seconds amongst dozens of other filters.
Book a demo here to start a discussion with our Director of Partnerships regarding partnering with PARiM.
Companies can also choose to add world-class employee scheduling and time tracking tools that PARiM offers to that package. Whichever way you look at it, Lyft, Uber and DoorDash, as well as similar companies will be changing the way they do business – and somewhat self-servingly we believe the most cost-effective way is to do it together with us at PARiM.