Uber and Lyft May Shut Down This Week

Rideshare platforms Uber and Lyft are locked in a battle with lawmakers this week over how to classify workers. This month, a California judge ordered the companies to classify their drivers as employees, entitling them to full-time pay. However, Uber and Lyft say their businesses can’t handle it — and they may shut down this week to prove it.

Uber and Lyft vs. The State

The potential shutdown is the latest development in a months-long dispute between rideshare companies and lawmakers in the state. Back in May, California Attorney General Xavier Becerra filed a motion to force the companies to classify their drivers as employees rather than independent contractors.

“Mis-classifying your workers as ‘consultants’ or ‘independent contractors’ simply means you want your workers or taxpayers to foot the bill for obligations you have as an employer — whether it’s paying a legal wage or overtime, providing sick leave, or providing unemployment insurance,” Becerra said in a statement at the time. “That’s not the way to do business in California. We’re seeking a court order to force Uber and Lyft to play by the rules.”

Threats of a Shutdown

Rideshare companies pushed back against the orders, claiming they would force them to shut down in an already dismal time for job numbers.

“The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law,” an Uber spokesperson said, according to The Verge. “When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression.”

Nevertheless, re-classification moved a step forward on Monday, August 10. California Superior Court Judge Ethan Schulman issued a stern injunction immediately compelling rideshare companies to make their drivers employees.

“To state the obvious, drivers are central, not tangential, to Uber and Lyft’s entire ride-hailing business,” the judge wrote in his ruling.

The injunction allowed 10 days for rideshare companies to appeal the decision, which Uber and Lyft both announced intentions to do.

“If the court doesn’t reconsider, then in California, it’s hard to believe we’ll be able to switch our model to full-time employment quickly,” Uber CEO Dara Khosrowshahi told MSNBC on Wednesday, August 12.

Lyft’s CEO, John Zimmer, echoed these sentiments in a call to investors the same day. “If our efforts here are not successful it would force us to suspend operations in California,” said Zimmer.

What Do Drivers Think?

In the midst of these legal proceedings, the companies are also making their case politically. The rideshare giants have joined with DoorDash to fund Proposition 22, a ballot measure that would explicitly classify rideshare drivers as independent contractors. The measure will appear on ballots in California this November.

Rideshare drivers themselves are split on the issue. Carlos Ramos, a full-time Lyft driver in California, called the threats of shutdown “a blatant example of billionaires trying to buy their way our and trying to bend the rules to fit only them,’ according to CalMatters.

Meanwhile, retiree and part-time Lyft driver Jan Krueger had a different perspective.

“I feel like the unions just want us to unionize,” said Krueger, who posts on Instagram as momlyft. “They just want to get their hands on this industry so bad.”

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Uber and Lyft Shut Down — Sources

CalMatters
CNBC
The Verge – “California seeks to force Uber and Lyft to reclassify drivers as employees within weeks”
The Verge – “Lyft joins Uber in threatening to pull out of California over driver status”