Lyft will shut down its app in California at 11:59 p.m. local time Thursday unless a judge grants its request for more time to appeal a ruling that and Uber must classify their drivers as employees.
“Lyft cannot comply with the injunction at the flip of a switch,” John Zimmer, Lyft’s president, said last week during an earnings call. “Reclassifying tens of thousands of self-employed drivers would be a significant challenge in normal times. And in the current pandemic environment, that would be nearly impossible.”
The move comes after the two ride-hail companies lost a lawsuit brought by California’s attorney general, accusing them of not complying with AB-5, the recently passed law that codifies how companies can delineate contractors from employees. The state said drivers must be considered employees; the companies maintain they are independent contractors.
It’s not clear when Lyft might resume service in the state, and it’s still possible a judge could rule in the company’s favor on Thursday.
“This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips,” the company said in a blog post.
In November, Californians will vote on Proposition 22, which Uber and Lyft, alongside other gig-work firms, have supported as an alternative to current labor laws. The measure would create a pooled fund to pay for healthcare, overtime, and other benefits for workers that would follow them between apps and jobs. It would also allow workers to retain the flexibility that an overwhelming majority of them say is the biggest plus of the work.
Uber has also threatened to shut down in California if the court does not rule in its favor on Thursday.
“We can’t go out and hire 50,000 people overnight,” CEO Dara Khosrowshahi said at an event hosted by Recode on Thursday. “All of our model, everything that we have built, is based on this platform that brings earners and people who want transportation and delivery together. You can’t flip that stuff overnight. It’ll take time and we’re going to figure out a way to be in California.
“We want to be in California, but if the court case comes in then we’ll have to shut down,” he continued. “We’ve got the best engineers in the world figuring out how we can rebuild this thing.”
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Axel Springer, Insider Inc.’s parent company, is an investor in Uber.