Ride-hailing companies Uber and Lyft were granted an emergency stay, nullifying their vows to shut down in California tonight.
An appeals court allowed ride-hailing giants Uber and Lyft to continue treating their drivers as independent contractors in California while an appeal works its way through the court.
Lyft had said it would shut down due to a recent ruling requiring companies to classify “gig” workers as full time employees.
“This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips,” said the company in a blog post.
Rival Uber has also been speaking out about the new law, and had also threatened to also suspend service.
California represents a substantial chunk of both companies’ businesses. It accounted for 9% of Uber’s worldwide rides before the pandemic caused people to avoid traveling. The state is even more important to Lyft, which doesn’t operate outside of the U.S. besides Canada. California accounted for 21% of Lyft’s rides before the pandemic, but that figure dropped to 16% during the April-June period as more people stayed at home and there were few places to go.
Lyft, which is based in San Francisco, blamed California politicians for pushing the judge to rule for something that “4 out of 5 drivers don’t support…This change would also necessitate an overhaul of the entire business model — it’s not a switch that can be flipped overnight.”
However, that sentiment isn’t shared by Gigworkers Rising, an organization supporting drivers.
Shona Clarkson, an organizer with the group called Lyft’s move “nothing short of extortion,” and an attempt to “scare politicians away from regulating them.”
After the passage of a new state law in May, California’s attorney general brought a lawsuit on behalf of gig workers, saying that classifying them that way robbed them of benefits. A California judge ruled against Lyft and Uber in early August, and the companies filed an appeal.
Lyft says the upshot of the new law is that 80% of its drivers would lose work “and the rest would have scheduled shifts and capped hourly earnings.”
The company says it will continue fighting for a benefits model “that works for all drivers and our riders. We’ve spent hundreds of hours meeting with policymakers and labor leaders to craft an alternative proposal for drivers that includes a minimum earnings guarantee, mileage reimbursement, a health care subsidy, and occupational accident insurance, without the negative consequences.”
In its blog post, Lyft pushed customers to support a California ballot proposition that it says would more fairly address benefits and work flexibility for gig workers.
Daniel Ives, an analyst with Wedbush Securities, noted that some 91% of Lyft drivers drive less than 20 hours per week, and 76% drive less than 10 hours.
“Overall in a COVID backdrop with ridesharing down 60%-70% the last thing investors want to see in this California soap opera turn down a more onerous path although for now Lyft is making the right decision in our opinion to defend its business model,” he says.
Follow USA TODAY’s Jefferson Graham (@jeffersongraham) on Twitter.
Contributing: Cathy Bussewitz, Associated Press
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