Please ensure Javascript is enabled for purposes of website accessibility
Uber and Lyft Get Court Reprieve, Will Continue Service in California
gvw_ap_news
By Associated Press
Published 5 years ago on
August 20, 2020

Share

BERKELEY — An appeals court has 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.

Both companies had threatened to shut down if a ruling went into effect Friday morning that would have forced them to treat all their drivers as employees, a change they said would be impossible to accomplish overnight.

Lyft told riders and drivers in a Thursday blog post that it planned to discontinue providing rides in California just before midnight tonight, unless a court grants a stay in a pending case. Uber CEO Dara Khosrowshahi had repeatedly said its service would have no choice but to stop providing rides in California if the state’s law goes into effect because the company can”t afford to hire 50,000 drivers as employees quickly enough to comply.

The shutdown would have been a major blow to two companies that still haven’t proven they can make money, even as they have held down their expenses by treating drivers as independent contractors who don’t receive the same benefits as their full-time employees.

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.

California Mayors Urged Court to Intervene

The unavailability of the two ride-hailing services also would have delivered another blow to the California economy by taking away the paychecks of Uber and Lyft drivers while also making it more difficult for people without cars to get around. That’s why the mayors of San Diego and San Jose, California — two of the three largest cities in the state — joined forces this week urging the appeals court to block the law from going into effect.

“Being forced into a situation where shutting down service is the only viable option hurts everyone at a moment when we need to pull together to help more Californians make ends meet,” said San Diego Mayor Faulconer, a Republican, and San Jose Mayor Sam Liccardo, a Democrat.

Both companies had sought the stay of an August 10 court decision that ruled they must start treating their drivers as employees, not independent contractors, by Friday morning. Both appealed and sought a stay on the decision.

The companies are hoping to overturn the California law underlying the lower-court decision with a ballot initiative in the upcoming election. Uber and Lyft are among the biggest contributors to a $110 million effort to get the initiative, Proposition 22, passed to rescind the law. Lyft urged for passage of the initiative in its blog post.

At issue is a decision that could re-shape the so-called gig economy as drivers, delivery workers and others who work for popular apps on an as-needed basis seek improved working conditions and benefits that many in the workforce enjoy.

Companies Have Argued They’re Tech, Not Transportation Companies

Wedbush Securities analyst Daniel Ives predicted losing Uber and Lyft rides in California would cause such a high level of frustration among consumers that it would help get the initiative passed.

In his ruling against Uber and Lyft, San Francisco Superior Court Judge Ethan P. Schulman ordered them to make the employment classification change for their California drivers, which would guarantee benefits like overtime, sick leave and expense reimbursement. That ruling doesn’t affect Uber’s growing Eats business, so regardless of what happens with the case, Uber will continue delivering food.

Schulman’s decision followed a new California law aimed at companies that employ gig workers. It says companies can only classify workers as contractors if they perform work outside the usual scope of their business. California Attorney General Xavier Becerra and several city attorneys sued Uber and Lyft, saying they were violating that law.

The ride-hailing companies have argued that they’re technology companies, not transportation companies, so drivers are not a core part of their business.

California officials say treating drivers as contractors harms more than just drivers, since the companies don’t contribute to the state’s dwindling unemployment insurance fund on the drivers’ behalf.

RELATED TOPICS:

DON'T MISS

Elon Musk Reclaims Top Spot on Forbes’ Billionaires List

DON'T MISS

California Just Blew Its First Deadline for Voter-Approved Healthcare Measure

DON'T MISS

Trump Administration Halts Dozens of Research Grants at Princeton University

DON'T MISS

Fresno County Sheriff’s Pilot Takes His Last Flight as He Retires After 31 Years of Service

DON'T MISS

A Palestinian From the West Bank Is First Detainee Under 18 to Die in Israeli Prison, Officials Say

DON'T MISS

How Safe Is It to Walk to School? Fresno County Wants to Find Out

DON'T MISS

Baseball Is Back! How to Listen to Your MLB Favorites and the Grizzlies

DON'T MISS

Trump Says He’s Settled on a Tariff Plan That Is Set to Take Effect Wednesday

DON'T MISS

Auto Sales Surged in Anticipation of Trump’s Tariffs

DON'T MISS

Raid Or Rumor? Reports Of Immigrations Sweeps Are Warping Life In CA’s Central Valley

UP NEXT

California Just Blew Its First Deadline for Voter-Approved Healthcare Measure

UP NEXT

Lakers Hold Off Rockets With 6 3-Pointers Apiece From Dorian Finney-Smith, Gabe Vincent

UP NEXT

Athletics Bat Boy Stewart Thalblum Takes Down Drone in Left Field

UP NEXT

NFL Postpones Tush Push Decision but Passes Other Rule Changes, AP Source Says

UP NEXT

March Madness: It’s South Carolina vs. Texas and UCLA vs. UConn in Women’s Final Four

UP NEXT

Major Layoffs Begin at Health Agencies That Track Disease and Regulate Food

UP NEXT

CA Snowpack Is Near-Average. What Does This Mean for Water Supplies?

UP NEXT

U.S. Bank Executive Terry Dolan Dies in Plane Crash Near Minneapolis

UP NEXT

California Gov. Newsom Says the Democratic Brand Is ‘Toxic’

UP NEXT

Silver Fire Grows to 1,250 Acres, Threatens Homes in Inyo County

Fresno County Sheriff’s Pilot Takes His Last Flight as He Retires After 31 Years of Service

6 hours ago

A Palestinian From the West Bank Is First Detainee Under 18 to Die in Israeli Prison, Officials Say

7 hours ago

How Safe Is It to Walk to School? Fresno County Wants to Find Out

7 hours ago

Baseball Is Back! How to Listen to Your MLB Favorites and the Grizzlies

8 hours ago

Trump Says He’s Settled on a Tariff Plan That Is Set to Take Effect Wednesday

8 hours ago

Auto Sales Surged in Anticipation of Trump’s Tariffs

8 hours ago

Raid Or Rumor? Reports Of Immigrations Sweeps Are Warping Life In CA’s Central Valley

8 hours ago

House Speaker Johnson Fails to Squash a Proxy Voting Effort From New Moms in Congress

9 hours ago

UN Agency Closes Its Remaining Gaza Bakeries as Food Supplies Dwindle Under Israeli Blockade

9 hours ago

Hooters Goes Bust and Files for Bankruptcy Protection

9 hours ago

Elon Musk Reclaims Top Spot on Forbes’ Billionaires List

Elon Musk has reclaimed his position as the world’s wealthiest individual, according to Forbes’ 39th annual World’s Billio...

4 hours ago

4 hours ago

Elon Musk Reclaims Top Spot on Forbes’ Billionaires List

6 hours ago

California Just Blew Its First Deadline for Voter-Approved Healthcare Measure

Nassau Hall at Princeton University is in Princeton, N.J., Oct. 8, 2024. (AP File)
6 hours ago

Trump Administration Halts Dozens of Research Grants at Princeton University

After 31 years of service, Fresno County Sheriff’s Deputy IV and Pilot Michael Sill is retiring, having logged over 10,000 flight hours.
6 hours ago

Fresno County Sheriff’s Pilot Takes His Last Flight as He Retires After 31 Years of Service

Khalid Ahmad holds a poster of his 17-year-old son, Waleed, who died in an Israeli prison, that reads in Arabic, "The hero prisoner Martyr, mercy and eternity for our righteous Martyrs," in the West Bank town of Silwad, northeast of Ramallah Wednesday, March 26, 2025. (AP/Nasser Nasser)
7 hours ago

A Palestinian From the West Bank Is First Detainee Under 18 to Die in Israeli Prison, Officials Say

7 hours ago

How Safe Is It to Walk to School? Fresno County Wants to Find Out

8 hours ago

Baseball Is Back! How to Listen to Your MLB Favorites and the Grizzlies

Vehicles at an Audi showroom in Miami, March 29, 2025. President Donald Trump has said that tariffs would encourage auto companies and their suppliers to move to the U.S. (Saul Martinez/The New York Times)
8 hours ago

Trump Says He’s Settled on a Tariff Plan That Is Set to Take Effect Wednesday

Help continue the work that gets you the news that matters most.

Search

Send this to a friend