The battle over workers between Uber, Lyft, and the gig economy will continue, according to analysts, CNBC reported.
Federal authorities tighten Trump-era labor regulations, indicating that gig workers of these services must be treated as independent contractors with a few labor law protections. However, this new regulation by the Department of Labor (DOL) does not instantly make gig workers eligible for overtime, unemployment insurance, and other benefits.
While state-level action is a possibility, Morgan Stanley analyst Brian Nowak argues that a federal lawsuit would be more effective in requiring corporations to provide health insurance and vacation compensation to drivers.
What Analysts Are Expecting
Analysts and commentators tracking the ridesharing business expect compromises. One is offering drivers at least limited benefits, a model known as independent contractor-plus. Two is that the Biden administration's pro-union position will lead to workers being categorized as employees.
Both ideas will certainly boost Uber and Lyft's prices and change the economic model for entrepreneurs utilizing their vehicles as small companies. Each shows ridesharing's unfulfilled potential, which is the lack of self-driving vehicles that investors expected to boost company earnings and put most drivers out of work.
Gig Workers as Independent Contractors
For the time being, the DOL guidelines will use a more comprehensive set of standards to establish whether or not an employee is an independent contractor.
Companies argue that drivers are independent due to the fact that they have some leeway in determining when they work via ridesharing platforms. Drivers' advocates say companies like Uber and Lyft should be held to the same standards as traditional employers when it comes to things like pay, scheduling, and monitoring, and even to the point where passengers can be asked mid-ride about whether or not their driver is behaving suspiciously based on their car's speed.
This policy shift by the federal government, which essentially returns things to how they were during the Obama administration, is happening at a particularly precarious time for both rideshare companies.
Uber and Lyft During the Pandemic
The Covid-19 pandemic devastated uber and Lyft since it reduced demand for automobile services among drivers and passengers. In 2020, shares of each firm dropped by more than half in value; by 2021, they had climbed to all-time highs; and now, in 2022, they have fallen by even more.
According to Nicole Moore, president of Rideshare Drivers United in Los Angeles and a rideshare driver herself, drivers have felt the effects of this decline in demand by receiving lower compensation.
Uber, however, denied Moore's allegations. The firm claimed drivers' income has increased to $37 per used hour. Uber drivers also furnish their own vehicles and fuel, but the company began charging a per-trip fuel cost in March charged to the passengers, with all the proceeds going to the drivers.
Related Article: Lyft: 60 Employees Face Expulsion, Adds to List of Tech Companies Lay Offs in This Time
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Written by Trisha Kae Andrada
