Lyft said Thursday that service in the state would stop at the end of the day if an appeals court does not lose its request to delay an order to classify its drivers as employees. Uber said earlier this week that it would also discontinue the service at midnight Thursday.
“This is not something we want to do because we know millions of Californians depend on Lyft for daily, essential travel,” Lyft wrote in a blog post on Thursday.
As part of an ongoing lawsuit, a California court last week ordered companies to redistribute their drivers in the state as employees instead of as self-employed in 10 days.
In response to that court decision, which was set to take effect 10 days from the announcement, both companies warned that they could stop operations in California. Each combined those warnings with a push for a referendum in November to free them from the law, known as AB-5, if they could not successfully appeal for a longer stay on the order.
While their first attempt at an appeal to stay the order last week failed, Uber and Lyft have since appealed to an appellate court in California.
Their decision to move forward with stopping services represents a risk for the two companies. Not only will they lose business in a state with an economy larger than most countries, but industry regulators say there is no guarantee that shutting down services will mobilize as much customer support as it may have before the pandemic passed the demand for rides.
But a redistribution of workers would represent a radical shift on the two companies forced. Uber and Lyft have both built massive wings of drivers by treating them as self-employed contractors. Managing employers instead of employees has meant they are not entitled to benefits such as minimum wage, overtime pay, workers’ compensation, unemployment insurance and paid sick leave.
Under AB-5, which went into effect on January 1, companies must prove that workers are free from corporate control and perform work outside the normal course of business to classify workers as self-employed instead of as employees.
.
Related
