Feb 6, 2020 - Economy & Business

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

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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.

Go deeper: Uber rolls out changes to California ride-hailing in wake of new law

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Uber, Postmates lose attempt to halt new California gig worker law

Photo: Justin Sullivan/Getty Images

A federal judge in Los Angeles denied a request by Uber, Postmates and two drivers to halt the enforcement of California's new law that codifies strict requirements for classifying workers as independent contractors.

Why it matters: This is a major blow to the companies and drivers in the case, as they were hoping to pause the application of the law while they sue the state to get it overturned. The law went into effect on Jan. 1.

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Uber's 2019 Q4 was slightly better than analyst expectations

Photo: DENIS CHARLET/AFP via Getty Images

Uber posted its fourth quarter results on Thursday, slightly exceeding analyst expectations, giving its stock a small price bump after market close.

Why it matters: Uber has not only been under growing pressure to show it can turn a profit sooner than later, but the company is facing new regulations in California that threaten its classification of drivers as contractors, instead of employees.

How Uber, Lyft made traffic worse

Photo: Smith Collection/Gado/Getty Images.

Ride-sharing companies aren't the traffic solution they'd once hoped to be, the Wall Street Journal reports.

The big picture: "Multiple studies show that Uber and Lyft have pulled people away from buses, subways and walking, and that the apps add to the overall amount of driving in the U.S.," per the Journal.