Unless an appeals court intervenes at the last minute, Uber Technologies Inc. and Lyft Inc. are ready to suspend their ride-hailing services in California on Thursday (Aug. 20).
In a blog post, Lyft said its rideshare operations in California would be suspended at 11:59 a.m. on Thursday.
“This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips,” Lyft wrote. “We don’t want to suspend operations. We are going to keep up the fight for a benefits model that works for all drivers and our riders.”
In a podcast Wednesday (Aug. 19), Uber CEO Dara Khosrowshahi said his company is incapable of employing all of its drivers in California, as a judge has ordered it to do, TheVerge reported.
“We can’t go out and hire 50,000 people overnight,” Khosrowshahi said on the Pivot School podcast. “Everything that we have built is based on this platform that … brings people who want transportation or delivery together. You can’t flip that overnight.”
Both stocks tumbled on the news. Lyft shares fell 6.2 percent to $26.41 while Uber shares were down 2.3 percent to $28.74.
One week ago, a California judge ruled Uber must end its practice of categorizing its workforce as gig workers in favor of classifying them as employees by Thursday (Aug. 20).
The change would provide drivers with benefits such as sick and vacation pay, unemployment insurance, workers’ compensation insurance and healthcare.
The judgment came after California Attorney General Xavier Becerra sued Uber and Lyft for violating the state’s new Assembly Bill 5 (AB5) labor law.
The companies appealed the decision to the California Appellate Courts, but a decision had not been issued by 1:30 Thursday.
On its blog, Lyft urges voters to support a ballot initiative in November to repeal the labor law. Proposition 22 “proposes the necessary changes to give drivers benefits and flexibility, while maintaining the rideshare model that helps you get where you need to go,” the company wrote.
Reuters reported an Aug. 9 poll among Californians by Refield & Wilton showed 41 percent of voters favor the companies’ proposal while 26 percent oppose it. The rest are undecided.
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