Ride-hailing companies Uber Technologies, Inc. and Lyft, Inc. are temporarily suspending plans to pull out of California after they were granted a reprieve from an appellate court. The legal decision delayed the implementation of an order that would have forced both companies to reclassify their drivers.
The decision has given the two companies more time to convince politicians, regulators and the public to reverse course. The extension also gives the companies' last-ditch ballot initiative time to pass and shift in their favor. However, the deadline for Uber and Lyft to reclassify their drivers as actual employees as opposed to independent contractors remains.
Just hours before the decision both companies were shutting down operations in California. Lyft announced Thursday all of its services would be suspended throughout the state by the end of the day if a decision wasn't immediately made. Uber issued a similar ultimatum earlier in the week stating that it would shut down operations if a decision wasn't made by midnight Thursday.
Uber welcomed the decision made by the Court of Appeals, according to company representative Noah Edwardsen. He said the reprieve should give everyone additional time to re-evaluate the important issues raised by the case and ensure that critical services such as ride-hailing will continue. In a separate statement Lyft said it would continue to operate in the state. It added it would continue to fight for the independence of its drivers in California.
The legal battle between the companies and the state followed the passing of a new law called the California Assembly Bill 5 which took effect in January. The expansion of the state's labor code requires companies to prove workers are not directly controlled and were working outside of their usual course of business before they can be classified as independent contractors.
Under the Court of Appeals' decision, the deadline for both companies to reclassify their drivers was moved to Sept. 4. Both will then be required to submit within 30 days plans on how they will comply. Oral arguments for the companies' ballot initiative are expected in October.
