Lyft poised to suspend ride-hailing in California



Uber and Lyft have battled state regulators on driver classification for over a year.

Angela Lang/CNET

Lyft will suspend its ride-hailing service in California on Thursday at midnight, if a state Court of Appeals doesn’t rule in its favor regarding an injunction against the company. The move follows a court order in California — likely its largest market — that requires Lyft and its rival Uber to reclassify drivers as employees. 

“As a result of a court order, we’ll be suspending rideshare throughout California at 11:59 PM PT on Thursday, August 20,” the company said in an update on its website. “We did everything we could to prevent this from happening and keep Lyft available for you, but it wasn’t possible to overhaul our business model and operations in ten days.”

Judge Ethan Schulman of the San Francisco Superior Court ruled on Aug. 10 that the ride-hailing companies must start classifying their drivers as employees in the state. The judge said the injunction against the companies wouldn’t be enforced for 10 days to give them a chance to appeal — something both companies said they did. 

The injunction stems from a lawsuit against Uber and Lyft filed by the state of California in May. The suit says the companies “exploited hundreds of thousands of California workers” by classifying drivers as independent contractors and are violating California’s AB5 law on worker classification, which took effect in January.

See also: Uber vs. Lyft: We compare the two ride-hailing apps

Uber and Lyft classify their drivers as independent contractors, which means the workers pay their own expenses, such as gas, car maintenance and insurance. Drivers also don’t have labor benefits like minimum wage, health insurance or paid sick leave. If they were to be classified as employees, many of those costs would then fall on the companies.

Hundreds of drivers in the state have been rallying to be classified as employees by the companies. On Thursday, several drivers groups planned a protest in front of Uber’s headquarters in downtown San Francisco demanding the companies abide by AB5.

Both Lyft and Uber said last week that if California forces them to classify their drivers as employees, they’ll suspend operations in the state. The Court of Appeals could rule to extend the 10-day pause on the injunction against the companies. If that happens, Uber and Lyft will continue operations as usual. If the court enforces the injunction, however, Lyft and likely Uber will halt their service in the state.

An Uber spokesman said the company had nothing to share on shuttering operations at this time. He pointed to past statements from the company saying, “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.” 

Lyft noted on its website that people can still use the Lyft app to access bikes, scooters, car rentals and public transit information.

In a blog post on Thursday, Lyft also urged people in California to support a ballot measure that the companies are backing called Proposition 22. In all, Uber and Lyft — along with Doordash, Postmates and Instacart — have put $110 million behind the measure. The proposition, which will be up for vote in November, seeks to exempt the gig economy companies from AB 5.

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