(Guardian) – Lyft has announced it will suspend its services in California starting Thursday at 11.59pm PT unless a court allows them to continue to classify drivers as contractors.
The company and its primary competitor Uber are awaiting a landmark decision from a court in the state, which would enforce a new labor law known as AB5. The law, which went into effect in January, would require the companies to classify its drivers as employees and provide them with a minimum wage and benefits.
California Uber and Lyft drivers brace for shutdown over worker classification
AB5 was passed in 2019 and went into effect in January 2020. Uber and Lyft had still not begun to classify drivers as employees, instead making a series of changes to their apps in an attempt to work around the law. In May, the state of California sued both companies for misclassifying drivers under the new law, compelling them to adhere to AB5.
Relating to that lawsuit, a California judge issued a preliminary injunction in August blocking Uber and Lyft from classifying their drivers as independent contractors rather than employees.
The judge gave the companies a 10-day stay during which the injunction would not have immediate effects. During that stay, both companies appealed the decision, and a decision regarding those appeals is set to be handed down from a court on Thursday.
Ahead of the appeal, both Uber and Lyft have threatened to suspend services in the state of California, their largest market in the US and the state where both companies were founded. Both have leveraged their large user base, sending push notifications in the app to millions of people, attempting to promote their views that drivers should not be paid full-time wages.
Uber said in a blogpost on Wednesday it “may have to temporarily suspend ridesharing in California” starting this week if its appeal of the decision is not successful. A spokesman from Uber said as of Wednesday it had not yet decided whether to suspend services.
On Thursday, Lyft made a more concrete threat and timeline, saying it will suspend its services at midnight if it does not get its way. Lyft announced the suspension in a blogpost on Thursday morning, saying it was not something the company “wanted to do”.
“We are going to keep up the fight for a benefits model that works for all drivers and our riders,” the blogpost said. Uber did not respond to request for comment.
In the blogpost, Lyft encouraged riders and drivers to sign its petition in support of Proposition 22, a measure on the November ballot that would negate the new labor bill. The proposition has millions of dollars in backing from Uber and Lyft as well as other gig economy firms that are affected by the law.
Uber and Lyft claim they cannot reclassify their employees while allowing them to continue to choose their own hours, a feature central to the gig economy. But there is nothing in the law that prevents this, said John Coté, the communications director for the San Francisco city attorney, Dennis Herrera, who is one of the parties bringing the lawsuit against the ride-hailing firms.
“When faced with the law, Uber and Lyft are now threatening to take their ball and go home,” he said. “No one is forcing Uber and Lyft to shut down. That’s a choice these companies are making to avoid paying their drivers what they’re owed.”
These threats to suspend services represent a means to “scare Californians into voting yes on Prop 22”, said Shona Clarkson, an organizer with Gig Workers Rising, a group representing Uber and Lyft drivers.
“Uber and Lyft’s heinous threats to kill driver jobs and leave California are nothing short of extortion,” Clarkson said. “Multimillionaire CEOs are choosing to lay off thousands of workers across California in the middle of a pandemic because they don’t want to pay them living wages or give them access to lifesaving benefits. We will not let this shutdown sway us.”