“#Uber says it can still deliver food in California following ruling”
August 18, 2020 | 11:52am
A spokesperson for the embattled ride-sharing giant — which has seen its business plummet as the Covid-19 pandemic has cratered the demand for transportation — said Monday that a judge’s recent ruling that Uber must classify drivers as employees does not appear to impact its food-delivery unit.
Uber and its rival Lyft were dealt major blows last week by a California ruling that they violated the state’s Assembly Bill 5, which requires companies to classify their workers as employees if they control how workers do their jobs.
While Lyft said it would be forced to shut down its operations in the Golden State if the court ruling goes into effect on Friday, Uber will have a lifeline through its Eats business, which has been surging during the pandemic.
Despite ride-hail bookings being down more than 75 percent from last year, delivery orders more than doubled last quarter, bringing in $1.2 billion in revenue.
Uber and Lyft are also looking into a franchise model for their California drivers, the New York Times reports. The new setup, which is reportedly only in the exploratory stages, would see the companies allow other businesses to create their own fleets on the platforms. This would allow Uber and Lyft to continue to argue that they are tech providers who simply connect drivers with riders.
Uber and Lyft prefer using that classification for drivers, because treating them as employees would require benefits such as minimum wage, paid sick and family leave, unemployment insurance and workers’ compensation insurance.
The companies stressed that there was no guarantee they would officially pursue the fleet model, with an Uber spokesperson saying they are “not sure whether a fleet model would ultimately be viable in California.”
Both companies have said they will likely be forced to suspend service in California in the short term when the judge’s ruling goes into effect.
Shares of Uber were up 1.3 percent in Tuesday morning trading, while Lyft was trading up 0.5 percent.
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