Lyft and Uber Drivers Are Now “Running Their Own Businesses”

You might need a business license to work in the gig economy.

Photo credit: Tony Webster, CC BY 2.0.

So here’s a fun fact from the Capitol Hill Seattle blog:

The most commonly opened business around Central Seattle in 2015 wasn’t a restaurant, bar, or law office. It was a sole proprietor transportation business primarily opened by contract drivers for rideshare services like Uber and Lyft.

Capitol Hill Seattle got that stat by looking at the business licenses Seattle issued in 2015, which gives us two interesting data points:

  1. There are a lot of Seattle residents driving for Uber and Lyft (“more than 9,200,” according to The Seattle Times).
  2. These people are now, technically, “running businesses.”

In what world is a gig economy rideshare driver running a business? In the legal one, technically; sole proprietors run their own businesses, independent contractors are sole proprietors, Lyft and Uber drivers are independent contractors, therefore Lyft and Uber drivers run their own businesses. QED.

Seattle began requiring rideshare drivers to obtain city business licenses in 2014. San Francisco just started requiring its rideshare drivers to get business licenses this year, but as SFGate reports, they’re also going to collect on drivers who had been “running their business” prior to the license requirement:

For the first time, San Francisco is going to require the 37,000 Lyft and Uber drivers who work in the city seven or more days a year to obtain a business license.
The license will cost drivers $91 a year if they earn $100,000 or less in gross receipts. If they have been driving for multiple years, they will have to pay a registration fee for the years in which they didn’t register.

That just doesn’t seem fair. SFist interviewed a driver who said he had asked, previously, whether any licenses would be required:

According to driver Michael Sicard, who spoke with CBS 5, “Uber and Lyft said that this is a new rule,” and that he’d “even emailed inquiries asking if there are any other permits or licenses that I’ll need and they said no.”

So Uber and Lyft drivers are now business owners and they can be required to pay fees and fines for the years they were in business prior to the city’s decision that they needed business licenses.

I did a quick search for “TaskRabbits business license” and “Postmates business license” to see if this license requirement had started to spread to other areas of the gig economy, and it hasn’t, yet—although I wouldn’t be surprised if it did. After all, if independent contractors are sole proprietors and sole proprietors are business owners, the burden of owning your own business while working for another business falls on you.

Which means the most common “new business” growth, both in Seattle and in as many cities as adopt this policy, will become the business of working for someone else.

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