Ridesharing giants Uber and Lyft received an unfavorable ruling when a San Francisco judge determined they must reclassify their drivers as full-time employees instead of independent contractors. Both companies were expected to shut down service by midnight Thursday if an appeals court didn’t delay the order. For the moment the shutdown is on pause. Everything hinges on whether or not the appeals court allows the law’s implementation to proceed.
California Attorney General Xavier Becerra filed a lawsuit in May alleging that both ride sharers were in violation of Assembly Bill 5, which compels businesses to categorize laborers as employees if their jobs were classified as the company’s normal trade, or the organization controlled how workers carried out their jobs.
A Superior Court judge determined last week it’s “overwhelmingly likely” that state law was being violated by both corporations for classifying their drivers as contractors. The ruling required Uber and Lyft to recategorize the motorists for hire as full-time employees within ten days, which would force both companies to pony up for benefits and unemployment insurance for every driver.
In response, each company issued a separate warning that they would be forced to shut down operations in California, and restructuring would drive up ride costs and reduce service offerings. Both companies quickly began the process of appealing the ruling.
Uber CEO Dara Khosrowshahi warned if the ruling holds up in California, “We will have to shut down until November.” Then he told reporters, “That’s a reality, so it’s not a game of chicken one way or another.”
Lyft President and co-founder John Zimmer echoed a similar threat, “If [appeal] efforts here are not successful, we would be forced to suspend our operations in California.”
The ten days allotted for the reclassification of drivers was to be up on Friday. Lyft announced the intended service halt on their website: “At 11:59PM PT today our rideshare operations in California will be suspended. This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips.” Uber made a similar statement earlier this week.
California labor advocates celebrated the decision as a victory for worker protections for hundreds of thousands of gig workers who go without the standard employee safeguards of unemployment insurance, minimum wage, and paid sick days.
In a statement, Lyft claimed that their drivers don’t want to become employees, and both companies maintained that contractors prefer the flexibility of freelance work. California lawmakers think the ride-shares just don’t want to pay their fair share.
Becerra doesn’t believe that the state should have to pay to take care of the workers the tech companies fail to provide for, “We’re going to keep working to make sure Uber and Lyft play by the rules.”
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Higher taxes and more regulation in completely Democrat run state. Will the last taxpayer to leave the state please turn off the lights? Oh…..they were already off!
I hope they do leave. The anti-gig bill that’s causing all of this is wreaking havoc on nearly all contract workers in CA, including trucking. But the unions love it. Pull out and move on.
Unions, a good idea in theory but unworkable in application. Like the teachers union, government worker unions, they eventually become corrupt, unable to cope with the power they are given. .Too much nepotism, politics, unaccountable funds and unfortunately, human nature.
Democrats in action. Doing what they can to destroy businesses and increase unemployment..
Maybe Merge like units, divisions?
workshare,?? expand marketbase