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A driver adjusts his face mask as Uber and Lyft drivers with Rideshare Drivers United and the Transport Workers Union of America lead a ‘caravan protest’ outside the California labor commissioner’s office amid the coronavirus pandemic on April 16, 2020 in Los Angeles, California. (Photo by Mario Tama / Getty Images)
Mario tama
Lyft will suspend service in California at 11:59 a.m. PT on Thursday after a court granted a preliminary injunction last week asking it to reclassify drivers as employees, the company said in a blog post. . The injunction was suspended for ten days while the companies appealed, but is expected to take effect on Friday.
Senior executives at Uber and Lyft warned last week that they would likely have to suspend service to comply with the court order, which would require them to restructure their operations and rehire workers.
Uber has yet to officially announce the suspension of service in California, but it should.
Lyft stock was down 8% on Thursday after the news broke. Uber shares were down 3%.
The injunction was part of a lawsuit filed by the California attorney general and three city attorneys claiming that Uber and Lyft circumvented workers’ expenses by falsely classifying them as contractors rather than employees. A judge allowed the state’s request for an injunction, saying he was not convinced the companies were meeting one of the key standards in the state’s new labor law, the Bill of l ‘Assembly 5 (AB5), which states that contractors must work outside the ordinary course of the rental business. Business.
Uber had planned to continue operating its food delivery service in California even during the suspension period, an Uber executive told Eater last week. The injunction targets carpool drivers, but scrutiny of food delivery services has already intensified under AB5, with the San Francisco prosecutor suing the DoorDash app-based delivery service for misclassifying workers.
Uber and Lyft have a chance to avoid further legal action under AB5 with a voting measure they back in November. If voters support Proposition 22, Uber, Lyft, and other app-based food transportation and delivery services will be exempt from AB5. The measure also provides additional benefits for site workers in these services.
While a suspension could elicit support for the voting measure if riders lack service, it will also provide an opportunity for competitors to rush. Two startups, Alto and Arcade City, have accelerated their plans to enter California amid the legal battle. Even existing services and taxi drivers could seize the opportunity to regain market share. However, ridership in all areas is already low as travel has stalled during the coronavirus pandemic.
Yet a similar situation arose in Austin in 2016 when Uber and Lyft suspended service there due to a new background check law they said would prolong their driver registration process. As several new services have taken hold, the two giants have regained much of their customer base upon their return after the state overturned the law.
In its blog post, Lyft encouraged voters to support Proposition 22 in November. He also said residents of California can still use the Lyft app for bike, scooter and car rentals.
This story is developing. Check back for updates.
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