Mere hours before rideshare hailing apps Uber and Lyft were willing to go dark in California over a judge’s order to classify its drivers as employees, an appellate court granted the companies a temporary reprieve from following the order.
And so, the rides continued – along with the companies’ refusal to consider rideshare drivers – who use Uber and Lyft’s apps to make money as de facto taxi drivers – as anything more than independent contractors. The status quo means the companies aren’t required to observe many important employment laws in California that would otherwise protect drivers’ rights to minimum wage, overtime, unemployment insurance, paid sick leave, and worker’s compensation.
What spurred Uber and Lyft’s threats to cease service in California was an Aug. 10 injunction ordered by a California court that would have compelled the companies to begin reclassifying their drivers in the state as full employees by Aug. 21. At issue were lawsuits brought against the companies in May, alleging that they were violating AB-5 – a newly passed state law that adds a more stringent clarification as to what makes an independent contractor an independent contractor. As plaintiffs argued, rideshare drivers didn’t fit the bill.
The appellate court’s stay on the injunction, however, is contingent upon the companies prevailing in both their appeal and a ballot initiative to repeal AB-5 in November. By Sept. 4, the CEOS of both Uber and Lyft are required to submit to the appellate court a 30-day implementation plan to comply with AB-5 and reclassify their independent contractors as full-fledged employees.
Should the companies fail in their endeavors, however, it’s possible that many drivers who use the apps to generate extra income may be kicked off the app as a virtual form of at-will termination. It’s also possible that Uber and Lyft may just make do on their original threats to cease service in California and even move their headquarters to states they deem more friendly to their business models.
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