FARGO — Rideshare drivers are keeping a close eye on California, where lawmakers have passed a bill that could drastically change how Uber and Lyft do business.
Chris Tangen fired up his SUV Thursday as he got ready to hit the streets around the Fargo-Moorhead metro. The Uber and Lyft driver loves having the ability to work when he wants to.
“I run a small business. (Rideshare driving) gives me the freedom to attend that when I need to,” he explained.
But eventually, that might not be possible. Legislation passed by California lawmakers could impact the rideshare industry by classifying certain types of contract workers as company employees. That means rideshare drivers would require a base pay, and in some cases, benefits.
Gov. Gavin Newsom is expected to sign the bill into law, and other states could follow California’s lead.
“I’m not afraid it’s going to happen here — I always knew it was going to,” Tangen said. “The whole industry has changed, and got way bigger than they ever thought it was going to be.”
Minnesota State University Moorhead business professor Greg Serdar says there will likely be a ripple effect once the bill is signed into law, as many states tend to follow what California does when it comes to business.
Serdar said that will be bad for Uber and Lyft — which are already billions in the hole.
“They may become regular cab companies, or maybe even driven out of business,” Serdar said.
Riders will likely have to start making up the difference.
“We estimate Uber and Lyft will have to raise their ride fees by about 30 percent,” explained Serdar, referring to rates in California.
However, rideshare drivers think they will still have an advantage over cabs.
“It’s not the price people like about it, it’s the convenience of the app (and) calling for a ride on the app. You can see the car coming,” Tangen said.
If similar rules are set up in either North Dakota or Minnesota, Tangen said the impact is expected to be harsher. He said most drivers in the Fargo-Moorhead area work for both Uber and Lyft, and if they are classified as employees it will likely mean they will have to choose one service or the other.
“On Tuesday afternoons, Wednesday afternoons you (will) sit around doing nothing,” he said.
Drivers might also lose the ability to make their own schedules, Tangen added.
Uber and Lyft have vowed to fight the bill in California, though their challenge may not start in court. Rideshare companies said they will spend millions to put the question to voters in a 2020 statewide referendum.