Tensions between Uber and regulators appear to be escalating with no end in sight:
a landmark bill this week which would reclassify millions of contract workers as full-time employees, beginning in 2020. Uber categorizes its drivers as contract workers, allowing the company to skirt laws that would impose a minimum wage and require employee benefits such as health insurance. Uber was one of the main targets of the legislation, according to the New York Times.
Uber's driver costs will likely increase in an effort to appease regulators, exacerbating the difficulty of achieving profitability. Uber maintains that the California legislation does not automatically reclassify its drivers, but the company is likely to receive considerable pushback on this front. Already, Uber has advocated for legislation giving drivers an earnings floor and"access to benefits.
While this would increase Uber's labor costs, it would not be as significant as the increase associated with reclassifying drivers as full-time employees. Either way, Uber's increased driver costs will follow itsof 435 technical employees in September. The convergence of these trends creates a difficult landscape for Uber to maneuver, particularly as it attempts to achieve profitability after accruing a $5.2 billion loss in Q2 2019.
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