Feb 6, 2020 - Economy

Uber's AB5-related changes haven't been great for California riders

Photo: Smith Collection/Gado/Getty Images

Prices and wait times have gone up for Uber passengers since the ride-hailing began making changes last month because of a new state law that makes it harder to classify workers as independent contractors, Uber CEO Dara Khorowshahi told analysts on Thursday.

Why it matters: Uber and other companies like Lyft, Postmates, Doordash have aggressively pushed back on the new law, known as AB5, as it threatens their business models.

From Khosrowshahi's call with analysts about Uber's Q4 earnings:

On average the service levels for riders have gone a little worse ... Prices in California are up more than the rest of the country. Some of these changes are resulting in higher prices to the customer. ...
Driver feedback has been positive in terms of the information and empowerment... From a rider standpoint, the service on balance is a bit more expensive ... AB5 has added a huge amount of uncertainty ... In the short term, a net negative for riders... It's probably been a net positive for drivers

Also on Thursday, California assemblywoman Lorena Gonzales, who spearheaded AB5, announced there will be upcoming changes to specific provisions within the law. That includes striking the limit of 35 annual submissions for freelance journalists, which was harshly criticized by many.

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