A traveler checks his phone next to an Uber sign, August 20, 2020 at Los Angeles International Airport in Los Angeles, California.
Robyn Beck | AFP | Getty Images
An appeals court in California has extended the length of time Uber and Lyft must comply with an assignment that requires them to re-assign ridershare drivers as employees. As a result, Uber and Lyft said they will continue to operate in California during the stay, after threatening to stop service.
The temporary reissue gives Uber and Lyft up to 5 a.m. PT on Tuesday to submit written statements agreeing to speedy procedures mentioned in the order.
The shares of Uber and Lyft were up about 6% after the order. Both names were in the negative after Lyft announced earlier Thursday that it would stop its service in California at midnight PT, but reversed its decision after the appeals court gave extra time. A Uber spokesman said the company will continue to operate in California during the stay.
“We are pleased that the Court recognized the important issues raised in this case, and that access to these critical services will not be denied while we continue to advocate for the ability of drivers to work with the freedom they want,” the spokesman said. of Uber said in a statement. Uber had not announced a decision to suspend services for the order.
Top executives at Uber and Lyft both said last week that they would likely have to stop serving in the state to comply with the court order. The lower court granted a 10-day stay on the preliminary injunction, but refused to extend it. That stay was set to expire at the end of the day Thursday.
California Attorney General Xavier Becerra had filed the lawsuit as part of a case in May alleging that Uber and Lyft violated the state’s new labor law, known as Assembly Bill 5 (AB5). aim to provide benefits to workers of gig economy. Becerra and city attorneys from San Francisco, Los Angeles and San Diego claimed that by violating the law, Uber and Lyft incurred expenses such as payroll taxes and unemployment insurance for their workers.
The stay will extend until Uber and Lyft’s appeal is resolved on condition that they agree to a new timeline and procedure. If they do not, the stay will expire on Tuesday at 5 p.m. PT. One of those conditions is that the CEOs of Uber and Lyft must both submit affidavits before or before Sept. 4. Confirm that they have developed plans to comply with the preliminary injunction within 30 days of a ruling if the appeals court confirms the preliminary injunction. and if Proposition 22, the voting measure exempting companies from AB5, fails.
“We are confident in the facts of our case and look forward to continuing our fight to defend the rights of workers,” a Becerra spokeswoman said in a statement.
While Uber and Lyft were prior to AB5, they later claimed that they were not subject to the law as technology platforms, instead as employers. Uber, for example, made changes to its platform in California that allow drivers to view more information about upcoming rides and have more control over their selections. That change could help Uber make the argument, it has no control over what workers do on the job, which is an important part of the three-way test that determines if hiring companies are employers.
But the lower court rejected arguments from the companies that the work of drivers is outside the normal course of their business, another requirement of the so-called ABC test.
An Uber executive told Eater last week that the company plans to continue operating its food delivery service in California in the event it breaks its ride-healing business. While the order focuses on driving drivers, food delivery services have already attracted control under AB5. In June, the San Francisco District Attorney prosecuted the app-based delivery service DoorDash for declaring workers.
At least two start-ups, Alto and Arcade City, have said they plan to enter California amid the legal battle. Other services, including traditional taxis, which already exist in the state, also saw a potential break from the service of Uber and Lyft as an opportunity to reclaim market share.
A similar freebie occurred in 2016 when Uber and Lyft temporarily left Austin, Texas, over a new background check law that they claimed would delay drivers’ signatures. Several new rideshare companies took hold, though Uber and Lyft eventually got passengers on their return once the state overturned the law.
This time, however, ride volume has already been dampened by the pandemic, which has prevented many people from traveling.
Uber and Lyft both support a voting measure, Proposition 22, that would exempt their companies from driving and providing food from AB5, while providing additional benefits for drivers. Voters will have the opportunity to decide on that question on election day.
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