California judge nixes Uber, Lyft bids to delay driver injunction
Dispute over employee classification
A California judge on Thursday refused to give Uber Technologies Inc. and Lyft Inc. more time to appeal his decision forcing them to classify drivers in that state as employees, which they have said would necessitate restructuring their businesses.
At a hearing in San Francisco Superior Court, Judge Ethan Schulman said he found no reason to extend his Aug. 20 deadline for the ride- hailing companies to appeal the preliminary injunction he issued on Monday before it could take effect.
“I am unconvinced that any extension of the 10- day stay is required,” Schulman said. “Both applications are denied.”
Uber and Lyft have said they will appeal.
Uber shares closed down 1.2 per cent in Thursday trading, while Lyft shares lost 5.4 per cent. Lyft had reported results late on Wednesday.
The injunction came in a lawsuit in which California and the cities of Los Angeles, San Diego and San Francisco accused Uber and Lyft of violating Assembly Bill 5, a new state law making it harder to treat “gig” workers as independent contractors.
Uber and Lyft prefer using that classification for drivers, because treating them as employees would require benefits such as minimum wage, paid sick and family leave, unemployment insurance and workers’ compensation insurance.
The hearing came one day after the companies threatened to temporarily stop serving California, arguing that treating drivers as employees would require overhauling their business models.
Neither company is profitable, and both have suffered steep ridership declines during the coronavirus pandemic. They have also said drivers prefer remaining independent.
Uber, Lyft, Doordash, Instacart and Postmates are spending more than US$110 million to support Proposition 22, a November ballot measure in California to keep drivers as contractors, but with some benefits.
In ordering an injunction, Schulman had assailed what he called Uber’s and Lyft’s “prolonged and brazen refusal” to comply with state law.
Legal experts say Uber’s short- term objective is to keep the sweeping enforcement order from taking effect until Californians vote in November on a ballot measure that would exempt app- based transportation and delivery companies from Assembly Bill 5. Uber, Lyft, Postmates, Instacart and Doordash have poured nearly US$ 111 million into a campaign that’s among the state’s most expensive ever and has raised 128 times as much money as the opposition.
If voters don’t provide a reprieve, Uber’s goal is to keep appealing court rulings as long as it can, according to lawyers and professors who’ve watched the company manoeuvre through regulatory crises for a decade. In London, where Uber is embroiled in a similar fight to keep its drivers from being reclassified as employees, the battle is now in its fifth year — with the U. K.’s highest court expected to issue a final decision soon.
University of California at Berkeley law professor Catherine Fisk said Uber is basically playing the same game as lawyers who defend criminals against the death penalty in its effort to avoid spending billions of dollars on drivers for overtime, health care and other benefits.
“People who represent inmates on death row often will litigate and litigate in the hope that new evidence will come to light showing their client was innocent, or in the hope that the governor will commute the sentence or in the hope that the people will abolish the death penalty,” she said. “And the longer you fight, the longer your client gets to live.”