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California governor Gavin Newsom. Photo by Bloomberg
Uber/Lyft

Uber Costs Could Rise by 20% if Drivers Were Employees

Photo: California governor Gavin Newsom. Photo by Bloomberg

A California bill that appears on the verge of becoming law could upend the business model of Uber and Lyft, by trying to force them to hire drivers as full-time employees rather than as contractors. Uber’s costs could rise by around 20% if that policy were applied globally, according to a former Uber executive who has examined the potential effects of such a law. 

Uber on Wednesday insisted that the new measure wouldn’t require it to change the status of its drivers, and it vowed to fight the issue in court after the proposed law takes effect in January. A spokesman for Lyft said the company also wouldn’t reclassify its drivers as employees next year, unless courts force it to do so. Postmates, a meal delivery company, is expected to take a similar stance, said a person familiar with the company’s thinking. 

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