Uber and Lyft lose bid to delay worker reclassification order in California
A Californian court refused to grant Uber Technologies Inc. and Lyft Inc. more time to appeal decision requiring the ride-hailing companies to classify drivers in that state as employees.
Uber and Lyft have lost their bid to delay a preliminary injunction that will force the two ride-hailing app companies to reclassify drivers as employees. A California superior court judge denied the companies request to delay the order from going into effect August 20.
At a hearing in San Francisco County Superior Court, Judge Ethan Schulman said he found no reason to push back his August 20 deadline for the companies to appeal the preliminary injunction he issued before it could take effect.
California Superior Court Judge Ethan Schulman granted a preliminary injunction forcing Uber and Lyft to reclassify their drivers as employees. The judge acknowledged that the order would change the nature of Uber and Lyft’s business practices in “significant ways,” and implementing the injunction would be “costly.”
The injunction came as part of a lawsuit in which California and the cities of Los Angeles, San Diego, and San Francisco accused Uber and Lyft of violating Assembly Bill 5, a new state law making it harder to treat “gig” workers as independent contractors.
The decision will require both companies to suspend operations temporarily in California if they fail to get the stay extended. Uber says that it plans to file an appeal as soon as possible and Lyft says it will immediately seek a further stay from the appellate court and will file that motion by the end of this week.
Both companies have made comments this week that if the stay isn’t extended, operations will need to be suspended. It could lead to a more dramatic move — at least from Uber, which has threatened to leave California for good.
Uber and Lyft are also aiming to build support for Proposition 22, a measure that voters will have a chance to approve or reject in the November elections.
Neither company is profitable, and both have suffered steep ridership declines during the coronavirus pandemic. They have also said drivers prefer remaining independent.
Uber, Lyft, DoorDash, Instacart, and Postmates are spending more than $110 million to support Proposition 22, a November ballot measure in California to keep drivers as contractors, but with some benefits.