California’s new labor law may cause major changes to Uber’s ride-sharing business in the state. The company said it is currently considering licensing the brand to independent franchisees. This measure can expand the relationship between Uber and its platform drivers, and can also be used as an alternative to classifying drivers as employees of the company .
Uber said that this model looks a bit similar to the company’s early black car operations. “Drivers can be paid at a pre-agreed hourly rate for their work on the app, but in exchange, fleet merchants can also monitor and manage driver activities and efficiency, such as requiring drivers to work overtime, stipulating their driving time and route, and improving travel Completion standards, etc.,” Uber spokesperson Matt Wing wrote in an email. “We are not sure whether the fleet merchant model will ultimately be feasible in California.”
In addition, it is reported that rival Lyft is also exploring a similar model. A Lyft spokesperson said the company is exploring “alternative models,” but declined to discuss details.
California intends to implement a new state law this year that requires companies to provide employee benefits to workers who contribute to the company’s core business. According to the law, ride-sharing companies need to provide minimum hourly wage guarantees and various other benefits for drivers on the platform. To this end, both Uber and Lyft are actively exploring alternative models for continuing operations in California. Both companies said that such changes will put tremendous pressure on their business models, and the law also goes against the wishes of many drivers.
Uber and Lyft have made many other business adjustments to ease the marketing of the state’s laws. However, the franchise model may not solve the problem. For example, the number of existing fleet merchants is insufficient to meet the needs of users throughout California. This may mean that, in addition to larger markets, Uber and Lyft may stop operating in other markets, and taxi prices will also rise significantly by then.
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