Lyft

State Appeals Court Puts the Brakes on a Ride Service Shutdown in California

An ongoing legal battle over the classification of drivers as employees or independent contractors in California is at the heart of Thursday's developments.

What to Know

  • Lyft said early Thursday it will suspend operations in California, unless an appeals court intervenes.
  • The threatened shutdown stemmed from a legal dispute over the classification of drivers as employees or independent contractors in California. 
  • A state appeals court granted a stay of the driver classification ruling, averting the planned shutdown.

A state appeals court intervened Thursday in an ongoing legal battle involving Lyft and Uber, granting an emergency order to prevent a planned shutdown of ride services in California.

Lyft announced in a blog post earlier Thursday that the company will suspend its operations Thursday night across California. Operations were expected to halt beginning at 11:59 p.m. Thursday, the company said, barring intervention by the appeals court in a legal dispute over another court ruling requiring drivers to be classified as employees instead of independent contractors.

The appeals court ruling allows ride service companies to continue treating their drivers as independent contractors while an appeal to the driver classification ruling works its way through the court.

Just as Uber and Lyft threatened to pull their businesses out of California, a court gave the companies more time to negotiate whether they have to classify drivers as employees. Scott Budman reports the latest on the battle over drivers.
Just as Uber and Lyft threatened to pull their businesses out of California, a court gave the companies more time to negotiate whether they have to classify drivers as employees. Scott Budman reports the latest on the battle over drivers.

A group of Uber and Lyft drivers planned to hold a rally at Los Angeles International Airport Thursday as they awaited word from the ride-hailing companies on a possible shutdown.

Uber and Lyft officials have threatened to shut down their ride services in California in response to the court ruling requiring drivers to be classified as employees instead of independent contractors. The companies have been fighting the change, which comes as a result of the passage of Assembly Bill 5 that took 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 a 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 had stated that if their appeals are unsuccessful and the ruling isn't stayed further, they may shut down operations in California as they would not be able to rapidly restructure their operations in order to comply with AB5.

Uber notified drivers this week about the possible shutdown, "so you can plan accordingly.''

Uber and Lyft are also working to combat AB5 by sponsoring Proposition 22, a ballot initiative that, if approved by voters in November, would allow ride-hailing drivers to work as independent contractors.

The companies contend in part that classifying the drivers as employees would force them to work standard shifts and hours, instead of their current ability to work when they want.

Copyright CNS - City News Service
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