Uber, Lyft get more time as they fight order

OAKLAND, Calif. — Uber and Lyft threatened to suspend ridehailing services throughout California on Thursday night, a defiant reaction to a judge who ordered the companies to reclassify their drivers as employees.

But hours before the ride-hailing blackout was set to begin, an appeals court granted Uber and Lyft a temporary reprieve, allowing them to continue operating while the court weighs their appeal. Oral arguments in the case are set for mid-October.

“We are glad that the court of appeal recognized the important questions raised in this case, and that access to these critical services won’t be cut off while we continue to advocate for drivers’ ability to work with the freedom they want,” said Matt Kallman, a spokesman for Uber.

The fight could drag on for months, as Uber and Lyft battle a state labor law intended to give employment benefits to gig workers. An appeals court is weighing the companies’ requests to overturn a judge’s order to employ drivers, but it is not clear when the court will issue a ruling. The court has ordered Uber and Lyft to submit plans for hiring employees by early September, in case the court does not decide in their favor.

“These companies may have bought themselves a little more time, but the price is that they have to demonstrate — under oath — that they have an implementation plan that complies with the law,” said John Cote, a spokesman for the San Francisco city attorney, one of the officials suing Uber and Lyft. “The court of appeal is calling Uber and Lyft’s bluff.”

If Uber and Lyft are forced to reclassify drivers, they are considering plans to establish franchise-like operations in California,

inviting third parties to hire their drivers rather than becoming employers themselves.

State officials said the companies must comply with the new law, known as Assembly Bill 5, so that workers have access to sick leave, overtime and other benefits — a need that has become more dire during the coronavirus pandemic.

But Uber and Lyft have argued that employing drivers would have a catastrophic effect on their businesses, forcing them to raise fares and hire only a small fraction of the drivers who currently work for them. They would temporarily shutter the businesses rather than comply, they said.

“While we won’t have to suspend operations tonight, we do need to continue fighting for independence plus benefits for drivers,” said Julie Wood, a Lyft spokeswoman.

Uber and Lyft have long categorized drivers as independent contractors, an arrangement that the companies say allows drivers to have more control over where and when they drive. But this model imposes a financial burden on drivers, who are responsible for their own vehicle maintenance, health insurance and other expenses that employers traditionally cover.