Uber, Lyft threaten California shutdown over driver status

Andrew Cummings
September 27, 2020

That May lawsuit alleged that Uber and Lyft were in violation of California labor law AB5, which seeks to grant benefits to gig economy workers and independent contractors.

The court's decision prevents a looming shutdown of Uber's and Lyft's ride-hail services in California.

Uber and Lyft have been granted an emergency stay on an order that would force them to reclassify their drivers, just hours before both companies said they would shut down operations in California because of it.

I'm talking about the possible disappearance from California of the popular ride-hailing giants Uber and Lyft.


In a post on Twitter, she said: "Uber & Lyft can quit crying now & work on reclassifying their drivers as employees ..."

Lyft and Uber are being sued by California for failing to follow the new labour law, Assembly Bill 5 (AB5), which gives drivers the right to sick pay, overtime and unemployment insurance.

Lyft spokesperson Julie Wood said, "While we won't have to suspend operations tonight, we do need to continue fighting for independence plus benefits for drivers."

"If we had to overhaul our business model, riders would nearly certainly experience dramatic changes too - prices would go up, wait times would increase, and service would not be available in many areas".

Despite the hardship that AB5 has inflicted, lawmakers have taken a hardline to enforce it especially against major companies like Uber and Lyft. That is part of the reason why the California appeals court judge granted a stay. That ruling doesn't affect Uber's growing Eats business, so regardless of what happens with the case, Uber will continue delivering food.


If the court decides to uphold the preliminary injunction and the ballot measure fails to pass in November, the companies should be ready to comply with the preliminary injunction within 30 days, the order states. "This is something drivers have told us over and over again that they want". The companies say their flexible on-demand business model is not compatible with traditional employment law and advocate for what they call a "third way" between employment and contractor status.

Meanwhile, Uber, Lyft and DoorDash are backing Proposition 22, a state ballot measure that they're pitching as an alternative approach to classifying gig workers. "The California Attorney General obtained a court order that requires ride share companies to hire drivers as employees - immediately - or else shut down", the post reads.

An Aug. 9 poll among Californians by Refield & Wilton showed 41 per cent of voters planned to support the companies' proposal and 26 per cent opposed it, with the remainder still undecided.


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