Uber, Lyft Avoid State-Wide Shutdown Amidst Legal Battle With California

Uber and Lyft have narrowly avoided a state-wide shutdown in California after an appeals court granted them an emergency stay in California Attorney General Xavier Becerra’s labor lawsuit against the ride-sharing companies.

According to Bloomberg News, the court’s decision allows the two companies to maintain their current business model, which relies on classifying drivers as independent contractors, instead of forcibly adapting to a new requirement that mandates drivers be classified as employees.

“We are glad that the court of appeals 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 Uber in a statement, reports the news agency.

“While we won’t have to suspend operations tonight, we do need to continue fighting for independence plus benefits for drivers,” said a spokesperson for Lyft, reports CNBC News. “That’s the solution on the ballot in November, and it’s the solution drivers want because it preserves their ability to earn and to use the platform as they do now — whenever they want — while also getting historic new benefits. Without it, 80-90% of Californians who earn on app-based platforms will lose that opportunity.”

In a blog post on Thursday, Lyft warned of an imminent business suspension that would go into effect at midnight, and blamed “Sacramento politicians” for pressuring them toward making the monumental decision.

“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 healthcare subsidy — while maintaining the flexibility and control that independent contractors enjoy. This is something drivers have told us over and over again that they want,” said Lyft.

“Instead, what Sacramento politicians are pushing is an employment model that 4 out of 5 drivers don’t support. This change would also necessitate an overhaul of the entire business model — it’s not a switch that can be flipped overnight,” said the company.

Assemblywoman Lorena Sanchez (D), the architect of the labor law AB5 – which prohibits businesses from classifying workers as freelancers if they don’t work “outside the usual course of the hiring entity’s business” – blasted the companies after the court’s decision and said they were using “scare tactics.”

“Uber & Lyft can quit crying now & work on reclassifying their drivers as employees. They have been on notice for 2 years, but now they have another month to figure it out without hurting their workers. Shame on them with their scare tactics,” she said.

Several months ago, California Attorney General Xavier Becerra filed a lawsuit against Lyft and Uber for not complying with the labor law.

“Californians who drive for Uber and Lyft lack basic worker protections — from paid sick leave to the right to overtime pay,” said Becerra. “Sometimes it takes a pandemic to shake us into realizing what that really means and who suffers the consequences.”

Congressman Kevin McCarthy (R-CA), who serves as the minority leader in the U.S. House of Representatives, blasted California Democratic politicians for pushing policies that hurt jobs in the state, reports The Bakersfield Californian.

“California is the leader when it comes to tech jobs, gig jobs, and others — and here Democrats control the state, and what are they doing? They’re crushing them,” McCarthy told a radio program on Wednesday, reports the news agency. “That’s why you’ve seen job after job after job leaving California.”

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