Update: Uber and Lyft will not be forced to shut down California operations tonight
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UPDATE 8/20 11:50 a.m. PST: CNBC has reported that Uber and Lyft will likely not be shutting down Thursday night after all, as a California appeals court has granted the rideshare companies additional time to comply with a court order that mandates drivers be classified as employees, as opposed to contractors. Lyft is yet to announce whether it will reverse its decision to suspend service.
Lyft is officially suspending service in California at 11:59 p.m. PST Thursday. Uber and app-based food delivery services will likely follow suit.
Last week, a California court granted a preliminary injunction requiring ride-share apps to reclassify drivers as employees rather than independent contractors. The injunction is set to go into effect Friday, Aug. 21, and companies are choosing to end service in the state rather than comply with the order.
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“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,” Lyft wrote in a blog post. “We don’t want to suspend operations. We are going to keep up the fight for a benefits model that works for all drivers and our riders.”
This injunction affects all app-based drivers. Although no other company has made a formal announcement yet, Uber is expected to follow in Lyft’s footsteps.
Uber and Lyft say most drivers prefer working as independent contractors because of the flexibility and ability to set their own hours. However, officials suggest that this deprives them of traditional benefits like a minimum earnings guarantee and health insurance.
“We can’t go out and hire 50,000 people overnight,” Uber CEO Dara Khosrowshahi said on a podcast Wednesday. “Everything that we have built is based on this platform that… brings people who want transportation or delivery together. You can’t flip that overnight.”
Speaking with Eater, an Uber spokesperson said that the shutdown would only apply to the company’s rideshare business and that Uber Eats will continue operating as usual. However, DoorDash was recently sued by San Francisco’s district attorney for misclassifying workers so it’s possible that app-based delivery services will shut down soon as well.
Uber, Lyft and DoorDash, Instacart and Postmates are encouraging voters to support Proposition 22 in November. This would override the state’s new labor law, Assembly Bill 5 (AB5), by classifying drivers and other gig economy workers as independent contractors.
California users will continue to be able to use the Lyft app for bike, scooter and car rentals.
This is a developing story and will be updated as more information becomes available.
Featured image by d3sign/Getty Images.
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