On August 10, a California judge granted a preliminary injunction that requires Uber and Lyft to stop classifying their drivers as independent contractors. In the event the companies continue, they’re likely to face further action from the court.
The order will take effect after 10 days. This is because the companies requested a brief staying during the appeals process. If the injunction is upheld, the ruling could have significant implications for both rideshare companies—particularly in the way of revenue. Because Uber and Lyft classify their drivers as independent workers, they haven’t had to pay for the costly benefits associated with having a full-time staff.
The preliminary injunction was requested as part of the lawsuit California Attorney General Xavier Becerra brought in May, along with city attorneys from San Francisco, Los Angeles, and San Diego. The suit alleges Uber and Lyft are violating California’s new Assembly Bill 5, which was created as a way to classify gig economy workers as employees. Uber and Lyft remain opposed to the bill, arguing that their independent contractors enjoy the flexibility of creating their own schedules.
Both Lyft and Uber have responded to the preliminary injunction. According to an Uber spokesperson, “The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law. When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression.”
In a statement to CNBC, Lyft had this to say: “Drivers do not want to be employees, full stop. We’ll immediately appeal this ruling and continue to fight for their independence. Ultimately, we believe this issue will be decided by California voters and that they will side with drivers.”
While the preliminary injunction does not end the legal battles for Uber and Lyft, it does give the state a better opportunity to recover the wages it believes drivers are owed who have been wrongfully classified as independent contractors.
For more information on rideshare worker classification and the latest legal updates, click here to visit our blog. In the event you have a legal question relating to an Uber, Lyft, or e-scooter crash, the Rideshare Law Group is here for you. Simply schedule a free case evaluation. We’ll review your situation, explain your legal rights and options, and help you determine how best to proceed to protect your financial future. Contact us today for more information.