By John Ince (The Rideshare Guy)
A cloud hangs over the entire ridesharing industry. It’s a legal cloud of ambiguity as to what exactly drivers are. Are drivers independent contractors as Uber and Lyft would have the world believe? Or are drivers employees – as two important legal bodies have ruled within the last six months? Further adding to the confusion, Recently, the 9th Circuit of San Francisco ruled that a major lawsuit on this issue could not proceed because driver’s signed away their rights when the signed up to drive for Uber and agreed to arbitration on these issues. So the issue remains in legal limbo and likely will for the foreseeable future.
It’s a legal issue that affects everything in this new space called the gig economy. Labor advocates argue that this gig labor development has set back labor rights fifty years. Those on the other side argue that it’s brought flexibility and income opportunities to countless people that otherwise would be wanting.
Strategically, Uber and Lyft’s legal teams are simply trying to keep the flood waters behind the dyke. But with each new ruling and each new lawsuit another hole gets punched in the dyke. Many observers, including this commentator, believe that it’s only a matter of time until the flood waters start flowing across the entire gig economy. When that happens, business models will be underwater.
And if it comes in the next year or so, the best laid plans of new Uber CEO Dara Khosrowshahi for a late 2019 IPO will be in jeopardy. When that happens, indeed, the financial foundations of ridesharing will start shaking. Investors will begin to question whether it’s as an economically viable proposition. They’ll wonder whether companies like Uber, Lyft and DoorDash are worthy of continued investor capital. So let’s take a look at the issue, the recent legal developments and the possible scenarios moving forward.