Uber and Lyft granted emergency stay, will not shut down tonight

Uber and Lyft granted emergency stay, will not shut down tonight

The shutdown would have been a major blow to two companies that still haven't proven they can make money, even as they have held down their expenses by treating drivers as independent contractors who don't receive the same benefits as their full-time employees.

"This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips", the company - valued in the billions of dollars - lamented.

Unless there is an "11th hour" legal intervention, Uber and Lyft will stop operating in the state of California at 11:59 p.m. Thursday. Both appealed and sought a stay on the decision.

"While we won't have to suspend operations tonight, we do need to continue fighting for independence plus benefits for drivers", a Lyft spokesperson said in a statement following Thursday's court order.

"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", Uber said in a statement.

Lyft shares rose as much as 8.7% on the news, while Uber's stock gained 7.75%.

The court granted a preliminary injunction last week but stayed it until Friday while the companies appealed.

Uber's CEO, Dara Khosrowshahi, wrote an op-ed for the New York Times last week stating the company agrees gig-workers should be treated better, but disagrees with singling out ride-sharing companies and the wording of the new law that would limit flexibility.

The ride-hailing companies have argued that they're technology companies, not transportation companies, so drivers are not a core part of their business. The injunction targets ride-hailing drivers, but scrutiny on food delivery services has already ramped up under AB5, with San Francisco's district attorney suing the app-based delivery service DoorDash, claiming it misclassified workers. The measure also provides for additional benefits for gig workers at such services.

Both Uber and Lyft are encouraging customers and drivers to support a measure appearing on November's ballot in the state that would exempt the companies from AB5.

As of October 1, Lyft had about 305,000 drivers in California who completed trips within the past year, though that number is likely far lower now as the coronavirus pandemic has kept many riders from traveling.

Lyft didn't immediately respond to a request for comment. It forces every worker to choose between being an employee with more benefits but less flexibility, or an independent contractor with more flexibility but nearly no safety net.

In a May 28 news release, Uber estimates to have 209,000 active drivers, but warned the coronavirus pandemic could decrease that number by 76%.

Earlier this month, Lyft co-founder and President John Zimmer told CNBC, "If our efforts here are not successful, it would force us to suspend operations in California".

Still, a similar situation played out in Austin in 2016 when Uber and Lyft suspended service there over a new background check law they said would prolong their process of signing up drivers. "Fortunately, California voters can make their voices heard by voting yes on Prop 22 in November".

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