Anatomy of a Monumental Uber/Lyft Rideshare Shutdown Event in California

Discussion in 'In the News' started by xcel, Aug 21, 2020.

  1. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    [​IMG] The writing was on the wall for Uber and Lyft on April 30, 2018 when the Dynamex vs. California Superior Court ruling was announced.

    Wayne Gerdes – CleanMPG – August 20, 2020

    Uber on July 4th, 2019: $5 surge for drivers after fireworks along the entire San Diego County Coast - $75 for 5-mile rides for customers, $15 to drivers.
    Lyft on Aug. 20, 2019: 108-mile LAX ride to Del Mar, CA reveals a customer est. of $384.88 while drivers would receive $103.22 incl. the $13.22 bonus as shown above.​

    With just a few clicks, screenshots of some of the more onerous driver payouts and customer charges are shown with no end in sight for the 2 rideshare giants.

    Carlsbad, CA -- With an impending rideshare service shutdown in California, the countries most populace state, the world’s fifth largest economy, and home to upwards of 25 percent of Uber and Lyft’s revenues and profits, what happened? The writing was on the wall for Uber and Lyft on April 30, 2018 when the Dynamex vs. CA Superior Court ruling was announced in the California Supreme Court.

    Prior to Uber's IPO, the company made reference to the ruling in their required SEC S1 IPO filing on April 11, 2019, a full month before the rideshare giant went public.
    On Dec. 3, 2018, California Assembly Bill AB5 was introduced and it was signed into law on Sept. 18, 2019 which included an A,B, C test for Employee vs Independent Contractor status along with minimum wage rules.

    In response to the passage of AB 5, several industries lobbied for exemptions. Uber and Lyft made an attempt on behalf of the rideshare industry, but their efforts were denied.

    The industries that were granted exemptions tended to have the following characteristics:
    1. The independent contractors had the wherewithal to set or negotiate their own prices
    2. The independent contractors had access to direct communication with customers
    3. The independent contractors earned at least TWICE the minimum wage
    On May 5th of 2020, the City Attorneys of San Diego, Los Angeles, and San Francisco and the California Attorney General sued Uber and Lyft for misclassifying their drivers as independent contractors in violation of both the Supreme Court ruling and codified through AB5.

    August 10, Judge Ethan Schulman of the San Francisco superior court ruled against Uber and Lyft but delayed enforcing his injunction order for 10 days to give both companies the opportunity to appeal.

    August 13, Judge Schulman denies Uber and Lyft’s appeal.

    August 14, Lyft files a request for an immediate stay in California’s appeals court.

    August 17, Uber files an emergency stay request in California’s appeals court.

    August 19, during a podcast interview, Uber CEO Dara Khosrowshahi stated,
    August 20, at 12:05 PM PST -- Uber and Lyft win an emergency stay from the appeals court over reclassifying workers and can continue operations during the appeal. The temporary reprieve gives Uber and Lyft until 5 PM PST on August 25 to file written statements agreeing to expedited procedures stated in the order.

    August 20, 2020 at 23:59:59, enforcement of the rulings and injunction against Uber and Lyft that were scheduled to go into effect are now on hold.

    All in, basic minimum wage protections for classified employees afforded by California’s Superior Court and codified through AB5 at $0.25/min for all minutes ($15.00/hour) and tax-free Federal Std. mileage for all mile’s reimbursement ($0.575/mile) for California rideshare and other classified drivers and employees state wide. These minimal protections afforded employees in businesses across the country are apparently to much of a financial burden for Uber and Lyft's despite California rideshare drivers enduring the highest fuel, insurance, and total vehicle ownership costs of any state outside of Alaska.

    Uber and Lyft have both proposed the November ballot initiative Prop22 that includes a pay schedule of $0.30/mile and $0.30/minute only from acceptance of a ride request to the drop off of a rider. These rates are the equivalent of another 20 to 30 percent rate cut for most rides taken at $0.60/mile and $0.21/min only with passengers onboard, both far below minimum wage and federal std. mileage rates that LA drivers are paid today.

    The time driving back home or waiting for the next request is on the driver, not the company. This is the equivalent of a cashier paid for their time only when there is a customer at their checkout and they are passing goods across the scanner plus paying for the scanner, the belt, and the space inside the store from which to work. All other time the walk from the time clock, the cash drawer exchange, wiping down the belts, wait between customers placing their goods on the belt, being called away when there are a free few minutes, paid breaks, and consolidating their cash drawer at the end of their shift would be on them, not the employer.

    Wayne is an analyst of Automotive and Gig economy trends.

  2. EdwinTheMagnificent

    EdwinTheMagnificent Legend In His Mind

    As someone who is neither a rideshare driver or customer , this seems like a pretty sucky deal.
    xcel likes this.
  3. Trollbait

    Trollbait Well-Known Member

    That and skirting regulations for drivers of taxis, buses, and even horse drawn carriages in some jurisdictions is how these companies planned to make a profit.
    xcel likes this.
  4. 08EscapeHybrid

    08EscapeHybrid Moderator

    I got out of Uber when they cut the driver's rate in my area to under $1/mile.
    xcel likes this.
  5. rossbro

    rossbro Well-Known Member

    A neighbor drove for them, couldn't afford the gas. Just more of the rich screwing the working.
  6. Trollbait

    Trollbait Well-Known Member

    Then one of the claimed benefits, reduced traffic congestion, never came to pass. It was believed people using personal cars would switch to public transit to get into the city, and then use ride share to get around. Didn't happen. So some places have cars working ride share on top of the usual traffic now.
    TheFordFamily and xcel like this.

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