Uber drivers in San Francisco will be seeing their costs for working as independent contractors for the company rise in the coming weeks. The reason is that the city of San Francisco has mandated all drivers for ride hailing services in the city who work seven or more days must now purchase a business license to operate legally. Drivers who don’t would be subject to fines and other penalties.
According to San Francisco City Treasurer Jose Cisneros, roughly 37,000 drivers identified as working for ride hailing services Uber or Lyft will be receiving a letter over the next few days outlining the new requirements. Drivers can register for the license via the city’s online business registration system. Drivers will have 30 days to respond to the letter by either submitting a business license application or an explanation about why they don’t need one. Every driver will have to display a current registration certificate in their car.
The business license needed to comply with city regulations costs $91 annually for drivers who collect less than $100,000 a year in fares. If every one of those people register, the city will stand to make $3.37 million a year. For those who have driven for several years, they will have to backpay the registration fees. Treasurer Cisneros said in a release, “I urge all the people receiving this notice, and all unregistered businesses operating in San Francisco to take prompt action to come into compliance immediately.”
Treasurer Cisneros says that the licensing requirement is needed to fairly implement San Francisco’s business registration requirements. In addition to going after Lyft and Uber drivers, he has also taken action against home-sharing company Airbnb, forcing it to pay taxes on behalf of its hosts. Each of the companies have now been operating in the San Francisco market.
This latest headache for Uber drivers comes because of the way they are classified by the company they work for. Uber classifies these drivers as independent contractors rather than employees, helping the company avoid extra costs including certain benefits and wage requirements. The city is using that classification to justify its requirements for the business licenses. If drivers are independent contractors, the city’s argument goes, they must register for business licenses.