Lyft And Uber Narrowly Avoid California Service Suspension

LOS ANGELES, CA — Uber and Lyft got to kick the car-share down the road Thursday, when an appellate court granted the ride-share companies a temporary reprieve delaying an injunction order that would have forced them to shut down service in California.

Following a decision by the state's 1st Court of Appeals, the companies now have until Sept. 4 to submit sworn statements from their CEOs with implementation plans for complying with a new law that requires them to reclassify their drivers as employees, rather than independent contractors. The companies will then have 30 days to implement this new plan.

Lyft and Uber were primed to suspend services starting midnight Friday after a San Francisco Superior Court judge granted an injunction order in response to a lawsuit brought by California Attorney General Xavier Becerra.

Lyft announced Thursday morning in a blog post that it planned to suspend operations at 11:59 p.m. PT Thursday, and Uber was expected to follow suit later in the day.

"We are glad that the Court of Appeals recognized the important questions raised in this case, and that access to these critical services won't be cut off while we continue to advocate for drivers' ability to work with the freedom they want," said Uber spokesperson Noah Edwardsen in a statement.

The injunction was part of a lawsuit filed by the state and three city attorneys that aimed to bring gig economy companies in line with state labor law. The lawsuit alleged that by misclassifying drivers as independent contractors rather than employees, the rideshare companies deprive them of protections and benefits like minimum wage, sick leave, and unemployment insurance.

On Aug. 10, San Francisco Superior Court Judge Ethan P. Schulman granted the injunction, ruling that he was not convinced the companies met a key provision of Assembly Bill 5, which establishes stricter labor standards for independent contractors.The bill says that to be classified as an independent contractor, drivers must have other jobs. The injunction was stayed for ten days while the companies appeal, but Schulman initially rejected the appeals.

AB5 went into effect Jan. 1, but companies like Uber, Lyft, and Postmates have strongly resisted and lent their support to Proposition 22, a November ballot initiative that would undo many aspects of the bill.

In the blog post, Lyft claimed that it has long been “advocating for a path to offer benefits to drivers who use the Lyft platform – including a minimum earnings guarantee and a healthcare subsidy – while maintaining the flexibility and control that independent contractors enjoy.”

The post accused politicians of forcing an employment model that would “necessitate an overhaul of the entire business model” and result in reduced service and worker layoffs. Both Uber and Lyft have claimed that the majority of their drivers wish to remain as independent contractors.

“The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law. When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression,” Uber spokesman Davis White said in a statement.

While Lyft does not mention the shutdown on its Twitter page, Uber retweeted a number of posts – including a joint statement from the mayors of San Diego and San Jose – decrying what a shutdown might mean for workers.

Yet many drivers support the move. Lyft and Uber drivers in Los Angeles, San Diego, and San Francisco went on a number of strikes in March 2019, ahead of Lyft’s initial public offering, protesting their working conditions. Lyft and Uber drivers again formed a “caravan protest” in Los Angeles in April in support of AB-5.

On Thursday morning, a group of Uber and Lyft drivers, alongside the Mobile Workers Alliance are expected to hold a rally outside of Los Angeles International Airport, in support of reclassification. Protesters also gathered in front of Uber's headquarters in San Francisco.

“Uber and Lyft are threatening to kill jobs in California,” driver and labor organizer Cherri Murphy told The Los Angeles Times.“I believe the companies are trying to force us into a decision around giving them what they want, and that’s Prop. 22, which is to keep denying us basic labor protections and benefits we have earned.”

Lyft announced that California residents can continue to use the app for bike, scooter, and car rentals, while Uber plans to continue its food delivery service UberEats.