Uber, Lyft granted reprieve just hours before shutdown in California

Daniel Fowler
September 30, 2020

Earlier this month, Lyft co-founder and President John Zimmer told CNBC, "If our efforts here are not successful, it would force us to suspend operations in California".

Uber and Lyft will continue operating as normal in California after both ride-hailing firms were granted an emergency injunction by a court on Thursday.

Barring a last-minute reprieve from the appeals court, the shutdown would be 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.

Uber and Lyft insist the vast majority of their drivers do not want to be employees, with some 80 percent reportedly working less than 20 hours per week. California-based Uber and Lyft drivers can breathe a sigh of relief and will be able to continue ride sharing services for the time being, but there is still work to be done.

It claimed Uber and Lyft were violating the state's gig economy law (Assembly Bill 5), which came into effect on January 1st.

"What Sacramento politicians are pushing is an employment model that four out of five drivers don't support", Lyft wrote on its blog.

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"If we had to overhaul our business model, riders would nearly certainly experience dramatic changes too - prices would go up, wait times would increase, and service would not be available in many areas".

However, while remaining compliant was on the mind of Uber CEO Dara Khosrowshahi, he seriously doubted the company's ability to hire all drivers as employees.

Uber is also expected to suspend its operations in California by Thursday night.

Proposition 22, a ballot measure that Californians will vote on this November, seeks to exempt rideshare and delivery drivers from Assembly Bill 5. Uber and Lyft opposed AB5 before it passed, but afterward it did, they claimed that they were not subject to it because they were technology platform providers and not employers.

As many as 100,000 California drivers would have had to stop driving if Uber and Lyft had followed through on their threat to suspend operations, Courthouse News reports.

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