Ride-hailing giant Uber, along with delivery company Postmates, sued California over a new law that aims to reclassify their drivers and delivery workers as employees instead of contractors. The law, which went into effect last week, could upend the business models of the companies that shaped the so-called “gig economy,” where contract workers use smartphone apps to accept odd jobs driving or delivering goods as frequently as they wish.
California’s new law creates the nation’s strictest test for determining whether a worker is considered an employee. The law aims to give workers rights such as minimum wage, mileage reimbursement, paid sick leave, medical coverage and disability pay for on-the-job injuries. It was designed to improve working conditions at companies that rely on contract labor such as Uber and Postmates.
Right now, Uber believes its drivers are classified correctly as independent contractors, so it hasn’t changed its business model to give drivers the benefits outlined above. If it was forced to classify its drivers as employees and provide the benefits outlined in the new law, that could end up costing Uber $500 million annually in the worst-case scenario, with an additional $40 million to $50 million in legal fees, said Dan Ives, managing director of equity research at Wedbush Securities.
Back up power urged for cell towers
When the nation’s largest electric utility preemptively shut off power last fall to prevent wildfires in California, customers lost more than just their lights – some lost their phones, too.
Data from the Federal Communications Commission shows 874 cellphone towers were offline during an Oct. 27 power shutoff that affected millions of people. The outages mean people who depend solely on cellphones couldn’t call 911 or receive emergency notifications, compounding the dangers associated with an unprecedented power outage in an era dominated by wireless communication.
On Wednesday, some Democratic lawmakers introduced legislation that would require telecommunication companies to have at least 72 hours of back-up power for all cellphone towers in high-risk fire areas. Telecom companies would have to pay for it.
Sen. Mike McGuire said he wrote the bill after meeting with telecom company officials last summer, where he said they assured him they had plans to prevent widespread outages during a power shutoff.
Consumers slow credit card debt
U.S. consumers slowed their borrowing in November, mainly by piling up less credit card debt.
The Federal Reserve said Wednesday that consumer credit rose by a seasonally adjusted $12.5 billion in November, down from a gain of $19 billion in October.
The sharp slowdown reflected a $2.5 billion decline in borrowing in the category that covers credit cards that followed a strong gain of $7.9 billion in October. November’s was the weakest showing since credit card debt fell by $2.8 billion in March.
Consumer borrowing is closely watched for signals it can provide about Americans’ willingness to take on debt to finance consumer spending, which accounts for 70% of U.S. economic activity.
Forecasters believe the overall U.S. economy slowed to growth of around 2.3% in 2019 after a strong 2.9% gain in 2018.