(The Center Square) – Within an hour of Lyft's announcement Thursday that the rideshare company was suspending services in the state of California because of a law requiring it to hire its drivers as full-time employees, a California appeals court judge granted Uber's and Lyft’s request for an emergency stay of the law.
Instead of being forced to reclassify their business or go out of business by Friday, the companies have until at least mid-October, when the court will hear oral arguments in a case challenging the law.
“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,” Matt Kallman, a spokesman for Uber, said.
In the meantime, a major push for Proposition 22 is underway. California voters will approve or reject a measure that would change the new state law to define app-based transportation (ride share) and delivery drivers as independent contractors and adopt labor and wage policies specific to app-based drivers and companies.
At issue is AB5, a bill that Gov. Gavin Newsom signed into law last year and became effective Jan.1.
AB 5 was promoted as a way to prevent freelancers from being “exploited” by businesses that weren’t paying benefits such as health care, overtime, sick leave and expense reimbursements, or contributing to the state’s uninsured employment fund or Social Security.
But Lyft argues that the bill would force passengers to experience reduced services, and “80 percent of drivers would lose work and the rest would have scheduled shifts, and capped hourly earnings.”
“What Sacramento politicians are pushing is an employment model that 4 out of 5 drivers don’t support," Lyft says of the law. "This change would also necessitate an overhaul of the entire business model – it’s not a switch that can be flipped overnight.”
In May, the state attorney general sued Lyft and Uber, arguing they needed to provide benefits and change employment classifications.
San Francisco Superior Court Judge Ethan P. Schulman ordered Uber and Lyft to comply with the law.
Both Uber and Lyft maintain that their drivers are self-employed independent contractors. They requested a stay, filed an appeal, and were granted a stay until Aug. 20. At roughly 12:20 p.m. PST, they were granted another stay.
Uber chief executive Dara Khosrowshahi wrote in the New York Times that Uber isn’t opposed to paying for benefits. It simply could not afford to offer full-time jobs to every driver. In an interview with Vox, he said, "We can't go out and hire 50,000 people overnight."
While Uber and Lyft may have received a reprieve, other companies, and thousands of freelancer workers, have not.
After the bill passed, Vox released more than 200 California freelance writers.
The sponsor of AB5, Assemblywoman Lorena Gonzalez, D-San Diego, tweeted of Vox’s layoffs, "I'm sure some legit freelancers lost substantial income and I empathize with that especially this time of year. But Vox is a vulture."
"These were never good jobs," Gonzalez also said. "No one has ever suggested that, even freelancers."
Faces of AB5 continues to post videos and stories of Californians who describe how the law directly caused them to lose work – and in some cases, their entire businesses.
“A lot of folks are now describing freelancer firings as an ‘unintended consequence’ of AB5,” Elizabeth Nolan Brown writes at Reason. “But this facet of the bill was well-known and discussed beforehand.
Before Newsom shut down the state in March over coronavirus fears, California accounted for 9 percent of Uber’s worldwide rides and 21 percent of Lyft’s rides, according to The Associated Press.
Newsom’s proposed 2020 budget includes roughly $20 million for the state to enforce the law.
Before the appeals court judge extended the initial stay, Lyft posted this message on its website: “At 11:59PM PT today, our rideshare operations in California will be suspended. This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips. We’re personally reaching out to riders and drivers to share more about why this is happening, what you can do about it, and to provide some transportation alternatives.”