| Hi all, it's Eric. We could be just a week away from Uber disappearing from its home state. San Francisco Superior Court Judge Ethan Schulman decided this week that Uber Technologies Inc. and Lyft Inc. are likely to lose their legal fight over a California law requiring workers in most cases to be treated as employees, not independent contractors, if they do work within the normal course of a company's business. He issued an injunction requiring them to start treating drivers as employees, but gave them 10 days to appeal before they had to comply. The companies did just that, while also threatening on Wednesday to leave California over the decision. A reckoning like this was a long time coming. Government officials and workers' advocates around the world have argued for years that the model of the so-called gig economy violates labor laws. But Judge Schulman's move was a leap that many other officials have been reluctant to take. The consequences could be significant, but they're also unknown. "I feel a little bit like I'm being asked to jump into a body of water without knowing how deep it is, how cold the water is," Schulman mused in a hearing prior to his ruling. The case against the gig economy is fairly straightforward: Uber and other companies like it should pay workers a traditional wage and offer them protections like other businesses do. If they can't make their business model work while paying a livable wage, maybe they shouldn't exist at all. Uber has argued desperately that there must be some middle way. It has repeatedly floated ideas where it will pay some benefits, but also keep treating workers as independent contractors. Critics see this as a ploy to pay less than it would under a traditional employment model, or to skirt some traditional worker protections. In a sense, this is obviously true. If it weren't more expensive for Uber to treat its drivers as employees, it would just do it. But the company does have a coherent case to make that some of its workers would be worse off if it treats them as employees. The challenge is that another group would benefit from the change. There's a strong case to be made that Uber drivers who work more than 40 hours a week are employees. Uber incentivizes them to work early morning commute hours and late nights when the bars are closing, pushing them into very long days while also not providing them protections if they get injured, and not paying them for sick days or vacations. But things get more complicated for part-time Uber drivers. Taxi services have never worked very well in the suburbs partly because it's not sustainable to keep a fleet of low-priced taxis on call at all times. Allowing someone to earn extra income when they have time to kill is a clever way to staff such a service. Forcing Uber to decide to make those drivers employees or cut them loose could disadvantage both drivers and passengers in many places. If the companies were forced to grant drivers employee status, they'd likely require drivers to align themselves with a single service. Restaurants, after all, don't let their waiters hop next door to see if a competitor is willing to pay more for the next hour or two. There is real flexibility in the Uber model. It's understandable that California took responsibility for workers and passed legislation to protect them. But the prospect of an Uber-less future has real downsides too. In many places, the business probably doesn't work without finding a compromise. This could be why there's been a lot of talk about undoing independent contractor status without a lot of action before Judge Schulman's cold-water jump. — Eric Newcomer | 
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