Lyft suspends service in California over employment dispute

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Reuters

Cycle touring company Lyft said it was suspending operations in California after a judge ordered it to treat drivers like employees.

Lyft and Uber have been told they need to classify their drivers as employees and not contractors by Friday.

Lyft has now announced that its services in California will stop Thursday at 11:59 p.m. local time (06:59 GMT Friday).

Uber has warned it will have to do the same if a stay is not granted by an appeals court by the deadline.

But Uber has yet to make an official announcement.

“This is not something we wanted to do because we know millions of Californians depend on Lyft for their essential daily travel,” Lyft said in a statement posted online.

What happened?

Both companies have always maintained that their drivers are independent contractors.

But a California law that came into effect earlier this year, known as AB5, extended the classification as an employee to workers in the “gig economy”.

The judge’s ruling that the law applied to both Uber and Lyft means companies must provide drivers with additional benefits, such as unemployment protection.

The two companies appealed the judgment – and requested a stay of its execution while the courts dealt with the appeal.

Unless the suspension was granted, the two companies had 10 days to undertake what they saw as a major overhaul of their California operations.

They both warned they could be forced to withdraw state services after 11:59 p.m. local time on Thursday.

What did the companies say?

Lyft says four of its five drivers don’t want to be classified as employees. Both claim that flexibility is appreciated by those who choose to work for them.

Both companies had emailed customers and sent app push notifications to try and get support for their case.

Uber chief executive Dara Khosrowshahi, meanwhile, wrote an opinion piece for The New York Times, saying his company was not really against paying the costs of things like health insurance.

Instead, he argued that the choice between being a full-time employee and a “yard” worker was a problem in itself and that the laws needed to be changed. He advocated a system in which companies pay benefits based on a rate per hour worked.

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Media legendTwo Uber drivers have opposing views on how the company should treat them

But he also said the company could only offer full jobs to a tiny fraction of its workforce. In a podcast interview with Vox Media, he summed up the problem as follows: “We can’t go out and hire 50,000 people overnight. ”

Lyft echoed the sentiment, telling the court it “cannot make the changes required by the injunction with one click.”

Companies benefit from external support.

Some drivers do not want to be seen as employees, and the mayors of San Diego and San Jose – a Democrat and a Republican – have joined forces to warn that shutting down services “virtually overnight” would hurt an employee. million inhabitants of the state.

What happens next?

There is a potential outcome for ridesharing companies in the coming months.

A vote that will be put to the vote in November, along with the U.S. presidential election, would grant Uber and Lyft a waiver of the law. This is proposal 22.

“Your voice can help,” Lyft wrote in its suspension of services blog post.

“Prop 22, offers the changes necessary to give drivers benefits and flexibility, while maintaining the carpooling model that helps you get to where you need to go,” he said.

Both companies, along with other supporters such as the food delivery app DoorDash, have reportedly spent millions of dollars lobbying and campaigning for the law.

Labor groups, meanwhile, strongly oppose it, saying it will save companies vast sums of money at the expense of drivers.

It is possible that a shutdown of services could last at least until November, when the issue can be decided by the outcome of Proposition 22.

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