Hours after announcing it would suspend operations in California, Lyft Inc. said Thursday it would not shut down by midnight after a state court greenlighted the rideshare company to continue operating while it fights a court order to reclassify its drivers as employees.
The court’s decision, also granted to Uber, gave both companies until September to provide plans with how they would come to compliance.
Under Assembly Bill 5, which took effect in January, the new classification means rideshare companies would have to treat their independent contractors as employees with benefits such as sick leave and overtime pay.
Lyft previously said on its website the initial decision to suspend services was “not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips.”
“While we won’t have to suspend operations tonight, we do need to continue fighting for independence plus benefits for drivers,” spokesperson Jule Wood said in an updated statement.
The move to shut down came after a California appeals court granted last week a 10-day preliminary injunction, alleging that the misclassification deprived gig workers of critical workplace protections.
“Our state and workers shouldn’t have to foot the bill when big businesses try to skip out on their responsibilities. We’re going to keep working to make sure Uber and Lyft play by the rules,” California Attorney General Xavier Becerra, who sued the companies over their classifications along with city attorneys from Los Angeles, San Diego and San Francisco, said previously.
Uber did not immediately respond to requests for comment Thursday but had previously indicated it would cut operations by midnight. The companies have previously expressed that their drivers want benefits while maintaining the control and independence that come with a contractor label.
“For multiple years, we’ve been advocating for a path to offer benefits to drivers who use the Lyft platform — including a minimum earnings guarantee and a health care subsidy — while maintaining the flexibility and control that independent contractors enjoy,” said Lyft on its website.
A spokesperson for Uber said in a statement, “The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law. When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression.”
Canyon Country resident and former Lyft driver David Verzwyvelen said Thursday the flexibility that came with the contractor status worked for many but fears that’s what might ultimately “kill itself.”
“I think (Lyft’s) system was a really good system to make some money on the side but because drivers wanted more as employees, they undermined that flexible system and now it’s gone altogether,” he said upon hearing the rideshare company’s initial announcement to leave California.
Lyft has evaded its responsibilities to provide “basic worker protections,” according to Assemblywoman Christy Smith, D-Santa Clarita.
“The California Supreme court made its Dynamex decision in 2018. Since then, Lyft has decided to fight against the decision and shirk its responsibilities rather than look out for their workers, while local small businesses have consistently followed the rules and done right by theirs,” she said Thursday.
State Sen. Scott Wilk, R-Santa Clarita, has long criticized AB 5 and opposed the bill, citing it left out many critical industries.
“By excluding some independent contractors, the Legislature is picking winners and losers,” said Wilk in a previous interview. In January, he co-authored two bills that aim to amend or overturn AB 5 by specifically addressing the newspaper industry and freelance journalists. “In many cases, this will mean the elimination of someone’s livelihood.”
Lyft said it has 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.”
There is a chance for Lyft and Uber to avoid further legal action: Proposition 22 is set to appear in the November ballot. Uber, Lyft and DoorDash launched the initiative with $30 million each to fund the campaign.
If voters pass the proposal, drivers would be labeled independent contractors and receive multiple benefits, such as minimum compensation, vehicle insurance, safety training and sexual harassment policies.
“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,” said Wood. “Without it, 80-90% of Californians who earn on app-based platforms will lose that opportunity.”