Less than two weeks ahead of the election, Uber and Lyft are hitting new roadblocks after pouring money into a ballot measure intended to protect their business model.
On Thursday, a California appeals court put that strategy into question when it upheld an earlier ruling that the ride-hailing companies must classify their workers as employees instead of independent contractors. The court ruling won't take effect for 30 days, adding even more pressure on the ride-hailing companies' Proposition 22.
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Over the last three years, L.A. Lyft driver Nicole Moore has watched her paychecks shrink as her hours have grown. Frustrated, she's ready to leave her part-time gig, but until now there have been few options. That's about to change.
This year, two Texas-based companies are going after one of rideshare giants Uber and Lyft's biggest markets: Los Angeles.
Dallas-based Alto plans to begin their services by the end of October. And the Austin collective Arcade City will start marketing its ride-hailing app in Los Angeles Tuesday. They will be joining other apps already trying to steal away market share such as Wingz and Swoop.
Arcade City, Another Side Gig?<p>Part of David's pitch to would-be drivers is that current Uber and Lyft drivers can start building networks even before the co-ops are fully functioning. Half of Arcade's Austin drivers still work part-time for other ridesharing companies, and drivers are promised 1% from every credit card purchase their referrals make for three years.</p><p>"Our model is like beautifully parasitic on the other," he said.</p><p>While prices depend on the city and co-op rules, an Arcade City ride will typically run you a couple dollars more than one from Uber or Lyft. Riders can also pay by cash or barter with drivers for rides. In some cases, drivers let riders pay them back days later.</p><p>Arcade, which emerged in the heat of a battle between gig workers and the two ridesharing companies in Austin, has not been shy about taking a stance against his competitors.</p><p>In an open letter to Californians, Arcade's David <a href="https://arcade.city/dear-california" target="_blank">encouraged drivers</a> to vote no on Proposition 22 "because Uber and Lyft's years of mistreating drivers and bullying local governments should be punished, not rewarded."</p>
Alto's Ride Hailing Model<p>Alto is a membership-based service, although non-members can hail rides. Half of Alto employees come from Uber and Lyft, Coleman said, and each one is interviewed and background checked before being hired. He said the company "attracts the most professional drivers," meaning ones who consider Alto a job rather than a gig to make extra cash.</p><p>It's expensive to absorb the costs of hiring employees, Coleman told dot.LA, but if companies don't pay into unemployment and workers compensation, taxpayers will. Indeed <a href="https://laborcenter.berkeley.edu/press-release-what-would-uber-and-lyft-owe-to-the-state-unemployment-insurance-fund/" target="_blank">researchers at UC Berkeley found </a>that Uber and Lyft would have paid $413 million to California's Unemployment Insurance Fund had they classified their workers as employees.</p><p>The company offsets the cost by charging more. Coleman told the <a href="https://www.dallasnews.com/business/entrepreneurs/2020/01/31/dallas-based-ride-hailing-company-alto-raises-6-million-to-expand-in-dallas-start-driving-in-two-new-cities/" target="_blank">Dallas Morning News</a> earlier this year that Alto customers come from more affluent households with incomes of $100,000 or higher.</p><p>Alto has plans to begin operations in L.A. by late October, just around the corner from Election Day when voters will decide the fate of Prop 22.</p>
An appeals court granted Uber and Lyft a reprieve on Thursday, hours before the California rideshare giants were poised to make good on their threats to suspend operations in their home state.
The move would have left hundreds of thousands of drivers in one of their largest markets without employment during a global pandemic and passengers stranded. Alternative ridesharing operations are ready to roll, but before we get to that here's a run down of what happened.
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