UPDATE: Lyft and Uber likely won't need to suspend operations in California today. The appeals court has granted an emergency stay on when the companies need to comply with a California state law, which requires they classify their drivers as employees on Aug. 20, according to The Financial Times. The court pushed the deadline to October, so that it can hear the full appeal.
Original story:
Lyft is suspending all ride-sharing in California later today, and Uber may follow suit, after a state judge ordered both companies to reclassify their contract drivers as employees and offer them full benefits.Lyft’s ride-sharing in the US’s most populous state will stop right before midnight. “This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips,” the company wrote in a blog post today.
Two days earlier, Uber also announced it “may” have to suspend its ride-sharing operations in California, citing the state judge’s recent ruling, which goes into effect later today.
“We’ve appealed this decision, but if we are not successful in our appeal, we will need to temporarily shut down by Thursday night,” Uber said. We reached out to the company on whether it’ll follow through and will update the story if we hear back.
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The suspensions mark Uber’s and Lyft’s attempts to oppose a new California state law that requires the local gig economy to treat contract workers as employees, and grant them benefits, such as a minimum wage, paid sick leave, and unemployment insurance.
Earlier this month, California state prosecutors secured a court win that forces companies to comply with the law. “Our state and workers shouldn’t have to foot the bill when big businesses try to skip out on their responsibilities,” state attorney General Xavier Becerra said at the time.
The issue has become particularly salient in light of COVID-19, which has caused ride-sharing demand to plummet, reducing earnings for Uber and Lyft drivers across California. "During this global pandemic, it’s even more important for drivers to get access to protections like unemployment insurance," according to San Francisco City Attorney Dennis Herrera.
However, Uber and Lyft say they can’t follow the law, claiming it would force them to overhaul their entire business model. “Passengers would experience reduced service, especially in suburban and rural areas,” Lyft wrote in its blog post today. “Eighty percent of drivers would lose work and the rest would have scheduled shifts, and capped hourly earnings.”
In response, both Lyft and Uber are hoping to resolve the dispute at the ballot box come November. The companies are advocating for Proposition 22, which would allow app-based transportation companies to classify their drivers as independent contractors.
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