A few hours after we published this news, CNBC reported that the situation had changed again. An appeals court in California granted Lyft and Uber a temporary reprieve. That decision extends the time before the companies need to comply with a new law that would force them to classify their drivers as employees instead of independent contractors. It’s unclear exactly how long this reprieve will last for. However, the immediate result is that Lyft did NOT shut down in California on Thursday at midnight, as they originally announced they would.
Original story is below.
Ride sharing company Lyft is playing hardball.
The company announced on Thursday that they will ceasing all operations in the state of California, effective at midnight (PST) on August 20. Yes, the same day of the announcement itself. At that time, users will no longer be able to use the app to order rides. Drivers will also be unable to provide their services and earn money.
Lyft is likely angling ahead the November vote of Proposition 22. It’s a proposed piece of legislation that focuses on whether app-based drivers are independent contractors or actual employees. There are significant differences between the two, including companies having to provide employees with certain benefits. If their drivers continue to be classified as independent contractors, Uber and Lyft don’t have to offer the same treatment. On the other hand, there are some drivers who don’t want to be classified as employees, preferring to continue to work whenever they want, for as long as they want, without much company oversight.
“We don’t want to suspend operations,” the company said in their announcement. “We are going to keep up the fight for a benefits model that works for all drivers and our riders. We’ve spent hundreds of hours meeting with policymakers and labor leaders to craft an alternative proposal for drivers that includes a minimum earnings guarantee, mileage reimbursement, a health care subsidy, and occupational accident insurance, without the negative consequences.”
Prop 22 Explained
Lyft also encourages voters to support Prop 22. A “yes” vote would allow ride-share drivers to continue to be independent contractors. A “No” vote would mean that California Assembly Bill 5 (2019) could be used to determine whether drivers deserve employee status. It’s an important designation when it comes to things like minimum wage, working hour limits, health care, scheduled shifts (or not), accident insurance, and a host of other factors.
Uber has also threatened to shut down their service in California. However, so far they haven’t followed through on their hard talk.