How Freelancer Law Might Change the Price of Rideshares

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The gig economy isn't just a catchphrase now — for many of us, it's a way of life, both as consumers and contractors. We grab work when we can, however we can, and we also call on workers to help us out with a click or a swipe. It's totally changed today's economy, and not always for the best. Efforts to level the playing field in one state may have a big effect on all the rest of us.

The New York Times reports that rideshare companies Uber and Lyft are considering new ways to operate in California, where both are based. This is thanks to a law in that state which requires drivers to be treated as employees, rather than contractors, to ensure fair pay and benefits for those drivers. Rather than dispatch rideshare drivers directly, Uber and Lyft are looking at whether to franchise their services, in effect enlisting their drivers in an existing fleet of cars and diminishing their own cut of customer fees.

The California Supreme Court ruled in 2018 that companies must pass a three-question test to see whether their contractors should really be employees, but many startups in the rideshare model claim there's no way to make a profit or stay nimble to market forces if they're forced to support a large employee base. Labor advocates aren't sympathetic, even if such measures could also mean an increase in cost to the consumer.

Other freelancers have been caught up in the state's law, which accidentally limits how much work they can do for one client, and which has also become a model for freelancer protection in other states. However this showdown shakes out, given California's size and influence, it's a developing story to watch out for.