Lyft and Uber ride-shares, and some app-based delivery services will not be suspended in California amid Prop 22 legislation debate.
As of Thursday, an appeals court has allowed Uber and Lyft to continue categorizing its drivers as independent contractors in California. For now, the pause on rides has been postponed following a lower-court ruling that was scheduled to be put in place midnight on Friday, which would have forced Uber and Lyft to treat their drivers as employees.
The title change is a matter that has been pushed by some drivers, which the company has mentioned would be s struggle to make in such a short amount of time, especially in the midst of the pandemic, KTLA reports. All week, riders have been getting messages on their applications stating that rides would be discontinued in California just before midnight without a stay. Uber CEO Dara Khosrowshahi said the company would be forced to shut down business if the state law went into effect due to the company not being able to employ 50,000 drivers in order to comply with the new legislation.
According to YesOn22.com, the new law, titled Prop 22, is “drastic legislation that takes away the ability of app-based drivers to work as independent contractors – eliminating hundreds of thousands of jobs and threatening the availability of rideshare and food delivery services.” California, one of both company’s largest markets, makes up 9 percent of Uber’s worldwide rides prior to the coronavirus. As for Lyft, California is of the company’s highest importance, as the rideshare app only operates domestically, except for in Canada. California represents 21 percent of Lyft’s rides before the pandemic. That number dropped by 16 percent between April and June.
KTLA reports that Uber said the appeals court reprieve will ensure its “critical services won’t be cut off while we continue to advocate for drivers’ ability to work with the freedom they want.” Lyft cosigned the statement, saying that it will continue to push for “independence plus benefits for drivers.”
However, on the opposing side of the argument, some California officials say driving as contractors does more harm than good because the companies don’t contribute to the state’s unemployment insurance fund for its drivers use. Jerome Gage, 28, who drives full-time for Lyft, said he is upset by the companies’ potentially brash decision to drop its drivers. “I’m outraged that they would just abandon their drivers, abandon their passengers, just abandon their obligations and duty as a business that was founded in California,” Gage said. “We can end all this when we vote no on Prop. 22 in November.”