Lyft SUSPENDS California service to avoid registering drivers as employees, Uber expected to follow suit

After a California court’s preliminary injunction required Uber and Lyft to reclassify drivers as employees, both companies threatened to shut down their ride-hailing services, with the latter confirming the move.

Lyft will suspend its transportation activity in California at 11:59pm local time on Thursday, the company announced in a blog post. “This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips,” the company – valued in the billions of dollars – lamented.

“We’re personally reaching out to riders and drivers to share more about why this is happening, what you can do about it, and to provide some transportation alternatives,” it added.

The drastic move was prompted by a preliminary court decision last week that required Uber and Lyft to stop classifying their drivers as independent contractors.

It followed a lawsuit filed by California Attorney General Xavier Becerra, who suspected the two tech giants have been ducking the state’s gig-work regulations. Currently, the companies’ drivers don’t enjoy the same level of job security or benefits as full employees.

Following the court’s decision, executives at Uber and Lyft stated that they were prepared to suspend their service to comply with the court order, as it would require them to go through restructuring and rehiring unless their appeal was successful in securing a delay to the earlier order. Uber has not yet confirmed that it will indeed cease operating in the state, as it had indicated previously it would.  

After Lyft confirmed its decision to suspend operations, a California appeals court on Thursday granted both it and Uber a temporary reprieve on the earlier order, giving them an extension until August 25 to file their written statements agreeing to the processes outlined in the order. Lyft has not indicated if it will continue with the suspension.

Rather than via a further court battle, the two companies may have a resolution in the form of an upcoming statewide ballot. On 3 November, Californians will vote on Proposition 22, which would specifically extend the definition of independent contractors to include app-based drivers.

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