Rideshare is still on. Lyft reverses its earlier decision to suspend its California operations after an appeals court grants a further stay.
The appeals court granted the reprieve in a decision announced Thursday. Uber and Lyft are mandated to submit a sworn statement stating that they will comply with the law if the court decides against their appeal. According to the LA Times, they have until early September to do so. The stay order will remain until the court decides on the appeal. However, both companies submit their written statements agreeing to the procedures within five days.
Court decision averted Lyf Rideshare suspension in California
Before the court decision, Lyft announced that it would suspend its California operations beginning Thursday. Lyft said the suspension is not something they want to do. The company said it would keep up the fight for a benefits model that favors all drivers. It has been working with policymakers and labor leaders in crafting an alternative proposal with no adverse consequences.
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Lyft is campaigning for voters to support Proposition 22. The initiative will be part of the November ballot. It seeks to reverse part of AB5. It also considers app-based drivers as independent contractors instead of employees. A simple majority vote will pass the proposal and exempt Lyft and Uber from complying with AB5. The stay would allow both companies to campaign for the initiative while continuing their operations.
Lyft said that they need to continue to fight for independence and benefit for drivers. That is the solution on the November ballot, the statement added. It is also the solution drivers want as it preserves their ability to earn and use the platform. Without that option, up to 90 percent of Californians earning on these platforms will lose that opportunity.
Lyft added that 4 out of 5 don't support what Sacramento politicians are pushing. About 80 percent of drivers will be out of work while the rest will have to be content with scheduled shifts and capped early earnings. They further stressed that low-income riders would be burdened with unaffordable prices.
Following the news, Lyft's and Uber's shares rose 5.8 percent and 6.8 percent, respectively. Before the granting of stay, Lyft's shares dropped up to 8.5 percent while Uber's stock tumbled by 3.2 percent.
California Attorney General Xavier Becerra and city attorneys of Los Angeles, San Francisco, and San Diego sued Lyft and Uber in May. They argued that their drivers should be classified as employees under AB5. Then a California judge ruled in favor of a motion filed by Becerra. The preliminary injunction mandated both companies to comply with the law immediately.
Last week both companies said that they would shut operations in California if they are forced to comply with AB5. However, Uber said it would continue its Eats operations in the state. Uber further noted that the new state law does not impact Uber Eats.
Becerra said they are confident in the facts of their case. And that they will continue fighting for the California workers' rights.
