Thursday Update: Lyft announced Thursday morning they would suspend rideshare operations in California starting at midnight but hours later, the appeals court granted their emergency stay order, allowing both Lyft and Uber to keep their employees classified as independent contractors as the lawsuit works its way through the appeals court. The latest details here.
San Diego Mayor Kevin Faulconer and San Jose Mayor Sam Liccardo urged an appeals court Wednesay to stay an injunction that they said would lead to a statewide shutdown of Uber and Lyft's operations starting this Friday.
The rideshare companies recently lost a court battle regarding Assembly Bill 5, with a judge ruling the companies must classify their drivers as employees rather than independent contractors in order to comply with the law, which went into effect Jan. 1.
San Francisco-based Judge Ethan P. Schulman ruled in favor of California Attorney General Xavier Becerra, and the city attorneys of San Diego, Los Angeles and San Francisco in their lawsuit alleging Uber and Lyft have misclassified their drivers, preventing them from receiving "the compensation and benefits they have earned through the dignity of their labor," such as the right to minimum wage, sick leave, unemployment insurance and workers' compensation benefits.
Schulman stayed his Aug. 10 ruling for 10 days to allow the companies time to appeal.
Both companies have stated that if their appeals are unsuccessful, they may shut down operations in California as they would not be able to rapidly restructure their operations in order to comply with AB5.
Faulconer and Liccardo's joint statement called for a stay on the injunction, citing economic impacts to California's gig workers, and a loss of transportation options and delivery services for critical resources like food and medical care for California residents.
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"This sudden disappearance of jobs and transportation options will only deepen the economic pain felt in our communities during this historic pandemic and recession,'' the statement read.
The mayors said a stay could allow state leaders and the companies time to craft "a resolution to this complex issue and avoid irreparable harm upon hundreds of thousands of residents whose lives and livelihoods daily depend on these services."
Faulconer and Liccardo also proposed the creation of a portable benefit fund for independent contractors that the companies would be required to pay into.
"Being forced into a situation where shutting down service is the only viable option hurts everyone at a moment when we need to pull together to help more Californians make ends meet," the mayors said. "We call on all parties to turn this political standoff into a foundation for productive conversation about new ways to preserve a valued service and fairly compensate independent workers.
"California can choose to continue to implement solutions that lead the innovation economy, or to be led by others. The livelihoods of nearly one million residents depends on California choosing to lead."
Uber and Lyft are also working to combat AB 5 by sponsoring Proposition 22, a ballot initiative that, if approved by voters in November, would allow rideshare drivers to work as independent contractors.
Assembly Member Lorena Gonzalez, who authored the bill, said following the ruling, "Uber and Lyft have been fighting tooth and nail for years to cheat their drivers out of the basic workplace protections and benefits they have been legally entitled to. They have enriched their executives and their bottom line, while leaving taxpayers on the hook to subsidize the wages and benefits of their drivers."
