As the battle between Uber and Lyft and the state of California continues, the rideshare companies are now saying they will shut down passenger service operations across the state unless a state appeals court overrules San Francisco County Superior Court Judge Ethan Schulman order from last week.
According to NBC News, the rideshare services could shut down for at least several months, if not more than a year. The decision to potentially shut down comes as the companies believe it’s impossible to comply with Judge Schulman’s order, which would involve classifying thousands of their drivers as employees—instead of contractors.
Judge Schulman found an “overwhelming likelihood” that Uber and Lyft misclassified their drivers. As a result, he issued a preliminary injunction ordering the companies to halt the practice. The rideshare companies, however, aren’t the only entities concerned about the injunction. The mayors of San Jose and San Diego issues a statement, asking the 1st District Court of Appeal to put the injunction on hold for fear that a shutdown would “deepen economic pain felt in our communities during this historic pandemic and recession.”
The mayors of those two cities largely agree with changes to AB5 that would align with what Uber and Lyft have already proposed. They believe the vast majority of drivers want to remain independent contractors. However, they also believe they deserve additional benefits.
Prior to Judge Schulman ordering the injunction, government lawyers wrote that rideshare companies have engaged in “unlawful behavior” for years. Uber and Lyft, however, believe that Judge Schulman’s ruling would require them to completely upend their entire business model and move drivers to less flexible working schedules.
In response to the potential for Uber and Lyft to shutdown instead of complying with the law, those same government lawyers released the following statement: “The fact that it may be difficult for Petitioners quickly to adjust their business operations does not alter the nature of the injunction requiring them to stop violating the law, nor does it allow them to profit inequitably from their unlawful status quo.”
At the time of the publishing of this article, neither Uber nor Lyft responded to NBC’s request for comments.
For more information on the employee classification battling currently happening in California, click here to visit our blog. We’re keeping our readers up-to-date on all the latest rideshare industry news.
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