Uber, Lyft Shutdown Averted in California by Court Decision

Uber and Lyft shutdown averted in California after court decision

Uber and Lyft won’t be shutting down their apps in California for now after a judge granted them a temporary reprieve.

The ridesharing companies appealed to extend the stay to a preliminary injunction from last week that requires both companies to classify their contracted drivers as regular employees under state law. The appeal was granted by the court on Thursday, with the judge extending the stay until at least mid-October.

“We are glad that the Court of Appeals recognized the important questions raised in this case, and that access to these critical services won’t be cut off while we continue to advocate for drivers’ ability to work with the freedom they want,” an Uber spokesperson told Digital Trends.

Lyft had originally announced it would shut down its app Thursday night in response to the law, but their operations will now remain uninterrupted. Julie Wood, a Lyft spokesperson, told Digital Trends they will continue fight for their drivers.

“While we won’t have to suspend operations tonight, we do need to continue fighting for independence plus benefits for drivers. That’s the solution on the ballot in November, and it’s the solution drivers want because it preserves their ability to earn and to use the platform as they do now — whenever they want — while also getting historic new benefits,” Wood said. “Without it, 80-90% of Californians who earn on app-based platforms will lose that opportunity.”

Uber and Lyft are both reportedly considering adopting a franchise business model that would license their brands to vehicle fleet operators. By adopting a model resembling an independently owned franchise, Uber and Lyft would not be in full control over their drivers.

Last week’s preliminary injunction required Uber and Lyft to stop classifying their drivers in California as contractors under a new gig economy law known as Assembly Bill 5 that went into effect earlier this year. Under the new law, contractors are eligible for basic protections like minimum-wage requirements, health benefits, and Social Security.

Along with Thursday’s successful appeal, the companies are hoping to reverse the bill in November through a ballot initiative known as Proposition 22.

“In California, the Prop 22 ballot initiative we’re supporting would protect driver independence and flexibility, while providing historic new benefits and protections, including contributions toward health care coverage, occupational accident insurance, and minimum guaranteed earnings,” Lyft co-founder, John Zimmer, said in an earnings call last week. “We will continue to fight for drivers’ independence.”

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