Ride-hailing will continue in California as Uber Technologies Inc. and Lyft Inc. won more time Thursday in their appeal of a ruling that ordered them to immediately classify their ride-hailing drivers as employees in compliance with state law.
In May, California’s attorney general and the city attorneys of San Francisco, Los Angeles and San Diego sued Uber and Lyft, accusing them of failing to obey California law by continuing to consider their drivers as independent contractors, and asked the court for an injunction to force the companies to classify them as employees. A San Francisco Superior Court judge ruled Aug. 10 that the ride-hailing giants must immediately comply but gave them a 10-day stay for their appeals. That expired Thursday.
Lyft had announced Thursday morning that it was shutting down its ride-hailing app at 11:59 p.m. A Lyft spokeswoman told MarketWatch that the company made the announcement ahead of a court decision on its appeal to a state court to prepare its customers.
Uber has not yet made an announcement Thursday, but CEO Dara Khosrowshahi said on television recently that the company intended to suspend ride-hailing, too, and that a shutdown could last at least until November, if it lost an appeal. The companies are counting on California voters to bail them out with Proposition 22, an initiative they and other gig companies have poured $110 million into to propose that gig workers be exempt from AB 5.
With Prop. 22, the companies are proposing a “third way” that gives additional pay and benefits to drivers but falls short of full employee protections. In its blog post, Lyft urged people to vote for Prop. 22 and said, “We are going to keep up the fight for a benefits model that works for all drivers and our riders.”
California Attorney General Xavier Becerra said in a tweet Thursday: “REMINDER: Companies can both classify their workers as employees and continue fostering the innovation that we deeply value as a state. For any company to suggest otherwise is a false choice.”
Lyft shares surged 9% and Uber shares rose more than 6% on the news.