Uber Technologies Inc and Lyft Inc together are spending nearly US$100 million on a November California ballot initiative to overturn a state law that would compel them to classify drivers as employees.
The companies say they would need to significantly hike prices to offset at least some of those additional costs, which in turn would likely cause a decrease in consumer demand, but cushion the blow of the added costs to the bottom line.Uber and Lyft have also said they could abandon the California market - an economy that would rank fifth in the world if the state were a sovereign nation. Other U.S. states have said they plan to follow California's lead and pass similar laws.
Under the company-sponsored ballot measure, so-called gig workers would receive some benefits, including minimum pay, healthcare subsidies and accident insurance, but remain independent contractors not entitled to more substantial employee benefits.The question of whether gig workers should be treated as employees has become a national issue in U.S. politics.
California represents 9per cent - or roughly US$1.63 billion in all of 2019 - of Uber's global rides and food delivery gross bookings. However, California generates a negligible amount of adjusted earnings before interest, taxes, depreciation and amortization, Uber said in November 2019.
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