What impact would the court decision in California have on Delivery and Passenger Companies?

A California court made the decision to classify Uber and Lyft Independent Contractors as Employees.

However both companies are appealing the decision and have made threats of leaving the State of California if the ruling stands. Currently the case is headed back to court and the decision will not take effect for 30 days.

In the meantime a vote in California may decide the fate of the companies as well.

Proposition 22 would allow the companies to keep the Independent Contractors and not change them to Employees.

So everything is on hold on the moment including a lawsuit from The State of California, and the cities of San Francisco, San Diego, and Los Angeles that would force Uber and Lyft to comply with State Laws.

This will also start to affect other companies like Doordash, Postmates, Grubhub, Instacart, or any small company that uses independent contractors.

If this vote fails, and the court decision holds all this will all have to change starting toward the end of November 2020.

So you ask what is the difference between EMPLOYEE and INDEPENDENT CONTRACTOR?

INDEPENDENT CONTRACTORS are SELF EMPLOYED

This means the contractors are responsible for all federal, state, unemployment, or social security from the earning they make. As Independent Contractors they also can choose hours, days, and schedules to work.

As a contractor they are responsible for all medical, dental, or any type of benefits, they don't get vacation pay, paid time off, or retirement benefits. As a contractor they operate as a business and can use expenses, maintenance to vehicles, gas expenses or expenses used for the business as a tax write off.

If the ruling goes in affect and the law changes the contractor to an EMPLOYEE this may happen:

Employees could be given a schedule, and forced to work available hours and shifts.

The companies would have to take out State, Federal, and Unemployment , along with Social Security Taxes out of paychecks.

The Company could tax tips as well.

This also means contractors would be filing out a lot of paperwork like W-4. I-9, and State Taxes.

The companies would be responsible for overtime, vacations, paid time off, and employee benefits.

As Employees the company could take or issue reimbursements for fuel cost, and maintenance on vehicles so the employee could no longer use these as tax write offs.

The company could also choose not to have the riders charged by the mileage rate and just pay the drivers the State or Federal wage.

OTHER POSSIBLE OUTCOMES:

The companies could do as they have stated and leave the State of California leaving about 400,00 drivers without an extra gig or income.

Riders could see an increase in rates and less available employees available for rides.