Last Wednesday, Uber lost a case in California that could force them to classify all of their drivers as full time employees. If this happens, Uber will have to allocate funding for social security, health insurance, and other expenses that come with having employees. This will not decimate Uber, which recently was valued at 40 billion dollars but for other startups that copy the “Uber Model” this could pose a serious issue.
This effect on the “On Demand” economy is huge. In an industry that Uber helped create, this ruling could now prevent other start ups from scaling like Uber because they will have to set aside large chucks of cash for employees benefits. Other companies that could be affected by this outcome include: Lyft, Seamless, Grubhub and any apps that hire independent contractors.
Uber is currently appealing this vote.