Founders Flash: Wait…Did California Just Attack Uber’s Entire Business Model?

The Flash naturally stood up and took note in May when Uber announced its plan to raise between $1.5B and $2B in new funding – replete with valuation of $50 billion – and its ascent to the position of world’s most highly capitalized startup. In addition to our focus on startups, we’re always tracking legal developments impacting businesses. That’s why The Flash looked with raised eyebrows when the California Labor Federation issued a decision on June 16 that could upend Uber’s (and Lyft’s, and that of other “sharing economy” startups) entire business model.

Essentially, California’s labor commissioner ruled that an Uber Technologies Inc. driver who connects with customers through the company’s app must be considered an employee (not an independent contractor, as Uber contends). This could mean many implications for Uber if the company must guarantee drivers a minimum wage, compensate for mileage, and pay into Social Security. Uber plans to fight this state agency ruling – and The Flash will be tracking this high-stakes legal tussle.

Additionally we’ve been keeping a close eye on Etsy since its April debut on Wall Street, (the largest B-Corp to file an IPO, by the way). Most recently, the online artisan-and-vintage marketplace company launched a program to help sellers raise money on its website to fund new products. Could this result in the company actually produce a profit?

These stories and more in this week’s edition of The Flash!

 

 
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