The Gig Economy Was Built to Thrive in a Downturn—Just Not This One

Hey, it’s Josh. The gig economy is facing two major crises at once. The first, and most obvious, is the coronavirus. On Tuesday, Airbnb Inc. said it was cutting a quarter of its staff because of the standstill in recreational travel; the sudden drop in all automobile trips has led Lyft to cut its staff by 17%; and similar dismissals could follow at Uber Technologies Inc. The extent of the wreckage should become clearer when Uber and Lyft report earnings this week.

The second reckoning has been looming for much longer. On Tuesday, officials in California sued Uber and Lyft for denying employee benefits to their drivers by classifying them as independent contractors. California’s suit, which relies on a law that went into effect this year, is the latest and most significant salvo in a battle that’s been ongoing for years.