The Future of Uber and Lyft Might Look a Lot Like FedEx
A new ‘franchise’ model could help the companies without necessarily improving working conditions
In 2009, the year Uber launched, FedEx made a change to its business model. The shipping firm had previously relied on independent contractors who owned their own trucks and were paid by the delivery or mile rather than the hour. For years, the company faced an onslaught of lawsuits arguing that the people who delivered mail in a FedEx branded truck and uniform should actually be classified as employees, rather than contractors, and protected by minimum wage and other labor laws.
To avoid treating workers as employees as a result of these lawsuits, FedEx pivoted instead to contracting with “independent providers” who managed multiple drivers, instead of independent individuals. The company argued that, in part, because these providers could negotiate their routes and rates, they met the definition of being independent and were not employees. That reasoning is still regularly challenged.
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Uber and Lyft — businesses that adopted a version of FedEx’s original independent contractor-field model — are now facing the same types of legal challenges the mail delivery giant battled a decade prior. Earlier this month, a California judge ordered the companies to adhere to a recently passed state employment law and treat their California drivers as employees, entitling them to a minimum wage, overtime pay, and other protections not granted to independent contractors. In response, both companies have threatened to shut down their operations in California, saying that it is impossible to change their business models quickly to comply with the law. They are also contemplating another move that comes straight out of the FedEx playbook, with the New York Times reporting that Uber and Lyft are considering moving to a franchise model for California drivers.
“This would be similar to how Uber Black operated a decade ago,” an Uber spokesperson told…