The California Court of Appeal on Thursday stayed a recent ruling by a San Francisco judge ordering ride-hailing service companies Uber and Lyft to recognize drivers as employees, meaning the companies won’t cease operations for now.
Both Uber and Lyft threatened to temporarily suspend service this week as the companies waited for the appeals court’s decision in a lawsuit brought on by California Attorney General Xavier Becerra, among others.
As part of that suit, San Francisco Judge Ethan Schulman last week ruled the two companies must comply with Assembly Bill 5, which took effect in January.
The law requires companies to apply specific criteria to determine whether their workers are employees or independent contractors. If the workers meet the criteria for employees, the company must pay minimum wage and overtime, provide paid sick leave as required by law, and pay for unemployment insurance, among other requirements.
Thursday’s order, however, is temporary and within the next two weeks, the companies must begin working on “implementation plans” for following the law, assuming that Schulman’s ruling is indeed upheld.
“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.”Uber statement
Lyft, Uber and food delivery service DoorDash are supporting Proposition 22 on California’s upcoming November ballot. The measure would allow ride-hailing service and food-delivery companies to continue classifying workers as independent contractors and not as employees.
Earlier Thursday, Lyft announced in a blog post it would suspend operations by the end of the day. Lyft argued that if the ruling is upheld and it would be forced to reclassify drivers, drivers would have scheduled shifts and capped hourly earnings while customers would be faced with longer wait times and unaffordable prices.
However, after the appeals decision, Lyft confirmed service would not be suspended for the time being.
On Tuesday, Uber said it may suspend service by Thursday night.
“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,” Uber officials said in a statement.
Both companies have maintained that a majority of its drivers prefer the flexible schedule afforded to them as independent contractors.
Earlier in the day, in response to the potential suspensions, drivers and labor groups rallied outside of Uber’s downtown San Francisco headquarters, demanding that Uber and Lyft follow the law.
“This rally, this fight, has always been about defeating Prop. 22 — Uber and Lyft’s latest attempt to write themselves out of the law. Even after a judge’s injunction order, the companies continued to sow confusion and fear amongst workers and voters by threatening to shut down the apps in California to scare voters into supporting Prop 22,” said Edan Alva, organizer with Gig Workers Rising, one of the groups that organized the rally.
“Now that the stay has been granted, the companies have backtracked on their threats and we, the workers, remain focused on defeating Prop. 22.”