Uber and Lyft could see drastic changes from new law

California’s State Senate has approved a landmark bill that would change the status of workers from self-employed to employees, which would have a knock-on effect to the ride-hailing service for customers.

Assembly Bill 5 (AB5) passed in a 29-11 vote and is in its first of three stages until signed into official law. The law would affect the rights of around one million workers; hundreds of thousands from Uber and Lyft.

Uber and Lyft have stressed that the law would reduce the flexibility of drivers. John Zimmer, cofounder of Lyft, said: “91 per cent of our drivers drive less than 20 hours and 76 per cent less than 10 hours” and the new law would “hurt the majority of drivers that are doing this on a more supplemental income basis.”

Changing drivers into employees could raise the cost of gig economy companies by 20 to 30 per cent, according to The New York Times. Uber and Lyft have warned that the consumers in California will experience increases in prices, but having scheduled driver shifts might see increased availability for the ride-hailers, and decreased rates of short-time employment.

“By approving AB5, the California legislature solidified our state’s position as the national leader on workplace rights, setting the standard for the rest of the country to follow,” the California Labor Federation said.

The law could see other states, and countries, following in the footsteps of California and the global future of Uber, Lyft and other gig economy companies could also see change.