Ride-hailing will continue in California for the time being as Uber Technologies Inc. and Lyft Inc. won more time Thursday in their appeal of a ruling that ordered them to immediately classify their ride-hailing drivers as employees in compliance with state law.
The companies have five days to agree to expedited procedures outlined by a state appeals court judge Thursday, which includes consolidating both appeals and requiring the companies to submit sworn statements by Sept. 4 from their chief executives that the companies have developed plans to obey an Aug. 10 order to classify their drivers as employees instead of independent contractors.
“Should Lyft or Uber fail to comply with these procedures, the People may apply to this court to vacate this stay,” wrote Stuart Pollak, presiding judge of the First District Court of Appeal in California. He set an Oct. 13 date for oral arguments in the case.
Uber and Lyft confirmed they will not be shutting down their ride-hailing services, as they had planned to do if they failed to secure an emergency stay.
“While we won’t have to suspend operations tonight, we do need to continue fighting for independence plus benefits for drivers,” said Julie Wood, spokeswoman for Lyft.
Uber spokesman Davis White said, “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.”
In May, California’s attorney general and the city attorneys of San Francisco, Los Angeles and San Diego sued Uber and Lyft, accusing them of failing to obey California law by continuing to consider their drivers as independent contractors, and asked the court for an injunction to force the companies to classify them as employees. A San Francisco Superior Court judge ruled Aug. 10 that the ride-hailing giants must immediately comply but gave them a 10-day stay for their appeals. That expired Thursday.
The two companies are counting on California voters to approve Proposition 22, an initiative they and other gig companies have poured $110 million into to exempt gig workers from the law, Assembly Bill 5, which became effective Jan. 1.
With Prop. 22, the companies are proposing a “third way” that they say gives additional pay and benefits to drivers and preserves their flexibility to choose when they work. But the initiative falls short of classifying drivers as employees with all the benefits that entails, including being eligible for unemployment insurance.