Uber, Lyft to temporarily halt California service if drivers are reclassified as employees

E-hailing Goliaths Uber and Lyft state that if they’re forced to reclassify their self-employed drivers as employees with benefits, they will temporarily suspend service in California, beginning Friday.

If drivers are reclassified as employees they will gain benefits and protections they currently don’t have, including unemployment, sick leave insurance and overtime.  However, they would then be required to work specific shifts on specific days – a move that could affect drivers looking for more flexible working conditions.

California Attorney General Xavier Becerra was granted a court order requiring ride-share companies to hire drivers as employees immediately – or shut down.  San Francisco based Uber posted the following statement in a blog shared with drivers on Tuesday:

“We’ve appealed this decision, but if we are not successful in our appeal, we will need to temporarily shut down by Thursday night…We wanted to let you know that this is a possibility, so you can plan accordingly.” Uber said.

Uber and Lyft must comply by midnight Thursday a San Francisco Superior Court judge’s order to obey the labor law Assembly Bill 5 and classify their drivers as employees instead of independent contractors; unless they win the appeal filed with the state,

Judge Ethan Schulman stated that the companies are “not entitled to an indefinite postponement of their day of reckoning”, in the August 10th order.  In their defense, Uber and Lyft say Schulman’s injunction order is so far -reaching that they are legally guaranteed a pause by the appeals court.

According to the ride sharing companies, reclassification of self-employed drivers would put an estimated 158,000 drivers out of work and boost passenger prices by up to 40% in Los Angeles County, up to 60% in Orange County and by as much as 120% in the Inland Empire.

Proposition 22- The Fight Back

The e-hailing and deliver companies are fighting back with Proposition 22.  The measure, which includes health care benefits and minimum earning guarantees, requires the companies to provide more favorable labor policies – without having to reclassify their drivers as employees.  Nearly $100 million was raised by Lift, Uber, and DoorDash among others, to place Proposition 22 on the November 2020 ballot.

Uber and Lyft both state that they will need time to reclassify their workers and update their operations around the new law, if their appeals fail.

A Work Stop would benefit Local Taxis Services

Although Lyft and Uber, along with many other service companies, saw a drop in revenue during the COVID -19 pandemic, residents of California have increasingly turned to Uber and Lyft for their transport needs.

Henry Royt, president of Independent Cab Co. in Los Angeles said taxi companies throughout the Golden State have lost a substantial amount of both drivers and revenue since Uber and Lyft began trading.  He stated, “We’ve lost 60 to 70 drivers to Uber and Lyft since they came in, and right now our business is at 30% of normal capacity because of the coronavirus,” he said. “We normally have 250 units on the road, but now there are only 80.”

Mr Royt stated that if the Work Stop occurs  “We anticipate a tremendous increase in business. Our phone’s been ringing off the hook.”

UPDATE 09/09/2020

Uber and Lyft granted emergency injunction

Uber and Lyft will continue to operate in California after a court granted an emergency injunction.
The court has ordered the companies to submit plans reclassifying their drivers by September, while oral arguments for the case are due to be heard in October.

The companies both say they will stop operating in California until they have switched their self-employed drivers to employees, if their appeal is not allowed.

Watch this space.