Uber, Lyft get reprieve from court
Ride-hailing firms stay in operation in Calif. ahead of October appeal
OAKLAND, Calif. — Uber and Lyft threatened to suspend ride-hailing 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.
State officials said the companies must comply with the law, known as Assembly Bill 5, so 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.
Uber and Lyft have long categorized drivers as independent contractors. 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.
Last year, the California Legislature passed AB 5 in an attempt to set clearer employment standards for the state and rein in gigeconomy giants like Uber.
Although the law went into effect in January, Uber and Lyft did not change their practices. They argued that AB 5 did not apply to them and spent tens of millions of dollars on a ballot initiative that, if passed in November, would exempt them from the law.