Uber and Lyft users reacted with relief last night after the ride-hailing apps avoided a shutdown in California. Both companies had thr...
Uber and Lyft users reacted with relief last night after the ride-hailing apps avoided a shutdown in California.
Both companies had threatened to suspend their operations at midnight over a ruling forcing them to reclassify their drivers as employees - but a state appeals court granted an emergency stay on Thursday.
The ruling means they can continue to treat their drivers as independent contractors, at least for now.
The news was met with relief by passengers who say they rely on Lyft and Uber for work and doctor's appointments and feared they would lose their jobs if the apps shut down.
Others feared a shutdown would cause chaos at airports and said they were reluctant to switch to using public transportation during the pandemic.
Uber and Lyft now have until August 25 to file written statements agreeing to expedited procedures to reclassify drivers as employees.
The two companies are also backing a ballot measure in November that would preserve the contractor status which Uber and Lyft say is favored by 80 per cent of drivers.
People wait for their ride-shares to arrive at San Diego Airport on Thursday, hours before a court ruling which averted a shutdown for Lyft and Uber in California
Lyft and Uber will be allowed to continue treating drivers as independent contractors in California amid their appeal in court, it was announced Thursday afternoon
Hours after Lyft announced it would suspend rideshare operations in California starting at 11.59pm Thursday, a state appeals court granted an emergency stay for Uber and Lyft
Rideshare driver Horacio Zelaya of Los Angeles takes part in a rally in Los Angeles on Thursday demanding Uber and Lyft deem drivers employees so they can be eligible for sick days and other benefits
Travelers wearing protective gear arrive off their flight at Los Angeles International Airport and look for their ride share as Uber and Lyft drivers organize a rally
Los Angeles resident Paola Herrera was among those who welcomed the news last night.
'I relay so much on Lyft and Uber for my doctors appointments so I feel relieved. Thank God! Immunocompromised girl over here,' she said.
A customer called Kaleb said: 'I rely on them to get around for my job and the idea of them shutting down genuinely scared me.'
Another California resident said she had had to sell her car last year and was unwilling to use public transportation during the current health crisis.
'I've used Lyft a lot and I hope something can be worked out,' she said.
Several workers had voiced fears that they or their relatives would lose their jobs if they could not rely on Uber and Lyft to get to work.
One resident said the shutdown would have led to 'skyrocketing prices for non public transport'.
'My boyfriend would have to quit his job because the bus takes hours to get to his job. I'm losing my patience with this state and this country,' they said.
Another said before the ruling was announced: 'I used to rely on Uber before I went on furlough. I have no idea when my job will open again, but this will really f*** me over if they stay suspended... I'm very worried about this.'
'Probably going to lose my job because of this Uber/Lyft suspension if I can't get to work...' said another before the stay was granted.
Others had voiced fears of what would happen at California airports including Los Angeles International, one of America's busiest airports.
'LAX is completely designed around Uber and Lyft picking up travelers and taking them home,' one investor warned.
San Diego mayor Kevin Faulconer said the shutdown would have caused 'financial calamity for hundreds of thousands of Californians'.
Matt Haney, a Democratic member of the San Francisco Board of Supervisors, accused Uber and Lyft of 'blackmailing' California voters with the threat of a stoppage.
Both firms are funding the campaign in favor of California's Proposition 22 which would keep drivers classified as contractors but provide benefits such as health care.
Rideshare driver Jesus Jacobo Zepeda of Lancaster, California pictured participating in a rally demanding Uber and Lyft give drivers 'basic employee rights' in Los Angeles on Thursday
People put their luggage in the back of a car at San Diego Airport on Thursday
Osman Khaliqi, a yellow cab driver, waits next in line for a fare at San Diego Airport - where he says he often waits up to three hours before getting a passenger
Lyft shared an initial statement announcing the suspension of rideshare operations saying, 'This is not something we wanted to do' on Thursday
Uber and Lyft's stocks were both up about six percent following the order
Uber and Lyft's stocks were both up about six per cent following the appeal court's order.
'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 said in a statement after the court decision.
Lyft shared an updated statement saying that 'rideshare is ON' hours after announcing it would halt operations at midnight.
'The California court has granted our request for a further stay, so our rideshare operations can continue uninterrupted, for now. Thanks to the tens of thousands of drivers, riders, and public officials who urged California to keep rideshare available for so many people who depend on it,' the statement said.
Lyft had announced on Thursday that operations were being suspended at midnight, before later canceling the decision.
'This change would... necessitate an overhaul of the entire business model - it's not a switch that can be flipped overnight,' Lyft said in a blog post.
Lyft added: 'We don't want to suspend operations. 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,' the statement added.
Uber had said that 'we will need to temporarily shut down by Thursday night' if the stay was not granted.
The firm's CEO Dara Khosrowshahi said in a MSNBC interview last week that the company's ride-hailing services in California will halt 'at least temporarily' if the order was not changed.
Last week Uber CEO Dara Khosrowshahi said in a MSNBC interview the company's ride-hailing services in California will halt 'at least temporarily' if the order was not changed
As of October 1, Lyft had about 305,000 drivers in California who completed trips within the past year, but today's number is likely lower due to the pandemic, as per CNBC.
Uber said in a recent blog post it had about 209,000 active drivers in California per quarter.
Uber and Lyft say the vast majority of their drivers do not want to be employees, with some 80 per cent working less than 20 hours per week.
The companies say their flexible on-demand business model is not compatible with traditional employment law.
Both are counting on voters to approve Proposition 22, which would keep drivers classified as contractors.
An August 9 poll by Refield & Wilton showed 41 per cent voters planned to support the companies' proposal and 26 per cent oppose it, with the remainder still undecided.
Analysts cautioned California regulators against the risk of putting more people out of work as American unemployment has spiked amid the coronavirus pandemic.
'California is trying to do the right thing, but this is the wrong time for it,' said technology analyst Rob Enderle of Enderle Group.
'This is not a time when you want to knock a whole lot of people out of work, which is the danger here.'
Air travelers arriving from New York in personal protective equipment (PPE) walk on their way to board a Lyft vehicle at Los Angeles International Airport on Thursday
Uber and Lyft drivers, some supporting the ballot measure and others opposing it, staged a noisy rally outside Los Angeles International Airport on Thursday ahead of the appeals court decision.
'If people want to be employed, they can look for a different job,' said Ramon, a driver supporting Proposition 22 who declined to give his full name.
California sued Lyft and Uber in May alleging the ride-share companies were violating the law that requires companies to treat workers as employees rather than independent contractors.
The issues of benefits was exacerbated with the Covid-19 pandemic because employees would be eligible for sick days and other benefits, but contractors are not.
Uber and Lyft, which are both based in San Francisco, argued their technology connects riders and drivers and that they are not transportation companies, meaning drivers aren't part of their usual course of business which would deem them employees.
Last week San Francisco Superior Court Judge Ethan Schulman sided with California and gave the companies until Friday to reclassify their drivers as employees.
But the companies said they can't meet that deadline in time.
Critics say the companies had nearly a year to address the mandates in the state's landmark law Assembly Bill 5 (AB5).
Travelers arriving at Los Angeles International Airport look for ground transportation during a statewide day of action to demand that both ride-hailing companies Uber and Lyft follow California law and grant drivers 'basic employee rights' on Thursday
AB5 establishes a three-prong test requiring employers to prove contract workers are independent, meaning the laborers must be free from an organization's control or performing work outside the company's core business, which Uber and Lyft failed.
Lyft said it has advocated for a path to offer benefits including a minimum earnings guarantee and a healthcare subsidy for drivers under the status as independent contractors.
Lyft claims that California is pushing an employment model 'that four out of five drivers don't support'.
That model, Lyft says, would reduce service to passengers in suburban and rural areas, result in 80 percent of drivers losing work, capped hourly earnings, and lower-income riders en route to essential jobs and medical appointments would be faced with unaffordable prices.
Uber says that 'We remain committed to helping drivers get access to new benefits and protections without compromising the flexibility they have today'.
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