Lyft's Rideshare Suspension in California

Lyft will stop running in California at midnight

Lyft to suspend rideshare operations in California in response to court ruling

AB 5, as it's known, requires employers to prove the status of an independent contractor by establishing that the laborer is performing work outside of the company's usual business, is already established in the work they do independent of their client, and is free from directorial control with regards to the work.

Although Uber and Lyft won some relief, it wasn't without strings attached. Uber also sent out a notification on Wednesday evening that rideshare services were on the verge of ending in California temporarily.

The court, which has scheduled arguments in the case for October 13, is unlikely to issue a final ruling before a November 3 ballot measure puts the decision in the hands of California voters.

California officials say treating drivers as contractors harms more than just drivers, since the companies don't contribute to the state's dwindling unemployment insurance fund on the drivers' behalf.

The Teamsters labour group attacked the idea of Lyft and Uber opting to suspend ride service in California, saying: "It's shameful there are companies that would rather cease operations altogether than abide by labour laws".

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As part of an ongoing lawsuit, a California court last Monday ordered the companies to reclassify their drivers in the state as employees rather than independent contractors in 10 days, or by this Friday.

Uber CEO Dara Khosrowshahi had repeatedly said its service would have no choice but to stop providing rides in California if the state's law goes into effect because the company can't afford to hire 50,000 drivers as employees quickly enough to comply. He added that he was frustrated because the mandate wasn't news for Uber or Lyft; they had plenty of time to put a plan together to classify their drivers.

"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 spokesperson Matt Kallman said in a statement to the Times.

Assemblywoman Lorena Gonzalez (D-San Diego) called the companies' threats to leave California a "mean-spirited tactic to bully Californians into giving the companies a special exemption" from the law, as reported in The Sacramento Bee.

The threat to suspend service in the most populous US state marked an unprecedented escalation in a long-running fight between regulators, labor groups and gig economy companies that have upended traditional employment models around the world. That ruling forced the companies to treat their drivers as employees starting Thursday after midnight. Currently, the companies' drivers don't enjoy the same level of job security or benefits as full employees.

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Schulman's decision followed a new California law aimed at companies that employ gig workers.

But the companies said they can't meet that deadline in time.

That model, Lyft says, would reduce service to passengers in suburban and rural areas, result in 80 percent of drivers losing work, capped hourly earnings, and lower-income riders en route to essential jobs and medical appointments would be faced with unaffordable prices.

It is unknown how long a ride-hailing shutdown would last.

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