Less than 24 hours after Uber threatened it would shut down its California operations over a new law that requires the company to classify drivers as employees, Lyft followed suit, saying that it would be forced to “suspend operations” in the state if the law isn’t reversed.
In an earnings call Wednesday night, August 12, Lyft president John Zimmer said: “If our efforts here are not successful it would force us to suspend operations in California. Fortunately, California voters can make their voices heard by voting yes on Prop 22 in November.”
Digital Trends reached out to Lyft for comment. We will update this story when we hear back.
Proposition 22 in California would effectively repeal Assembly Bill 5, voted into law last September, which extends employee classification to gig workers. As it stands now, all Lyft and Uber drivers are given independent contractor classification, where they essentially work as freelancers for the company and can pick and choose their own schedules. California harbors one of the largest pools of gig economy workers.
Labor advocates say the AB5 classification will allow California’s gig workers to obtain more traditional perks of full-time employment, like health insurance and workers’ compensation. Right now, no Lyft or Uber drivers are given these benefits.
On Monday, a preliminary injunction was granted to Uber and Lyft to appeal the classification of their drivers by next week after a judge ruled that the companies must make their drivers full-time employees.
Both ride-hailing services, as well as food delivery service DoorDash, have thrown millions of dollars into supporting Prop 22 — the industry’s last-ditch effort to repeal AB5 if any legal challenges during the temporary injunction fail in the courts.
On Wednesday, Uber CEO Dara Khosrowshahi threatened to shut down its operations in California if the classification was to move forward for “several months.” Both Uber and Lyft have been vocal about their opposition to the bill, and said each operation would not be able to afford to treat their massive pool of drivers as employees.
Editors' Recommendations
- Uber and Lyft shutdown averted in California after court decision
- Uber and Lyft might adopt a franchise business model in California
- California sues Uber, Lyft to force them to make drivers employees
- Uber says drivers aren’t an essential part of its business
- California’s gig economy bill could fundamentally change Uber and Lyft
