Hours after Lyft announced that it would stop operating in California last week because it couldn’t profitably comply with the California’s AB 5, which declares drivers as employees, a California appeals court issued a stay on a lower court ruling enforcing AB 5.
Democratic San Jose Mayor Sam Liccardo and Republican San Diego Mayor Kevin Faulconer helped broker this timeout so that unions and gig companies could “come together with state leaders to negotiate a resolution to this complex issue and avoid irreparable harm upon hundreds of thousands of residents.”
The final say over whether drivers—who can 1) work for multiple companies, 2) set their own fares, and 3) set their own schedules—are employees or contractors may ultimately belong to California’s voters. They will decide via Prop 22 on election day whether drivers are contractors or employees. Unions are behind the push to outlaw these contracting arrangements.
“This is what we’ve been fighting for over the past two years,” Lyft driver and Mobile Workers Alliance organizer Mike Robinson said. “Any driver can tell you that we are obviously employees and we’re essential to the success of Uber and Lyft. We know it, the state legislature knew it when they passed AB5, and Judge Schulman has confirmed it.”
Uber and Lyft were ordered by a judge to classify their drivers as employees, as dictated by Assembly Bill 5. Company officials warned they would have to shut down to comply with the order.
“To state the obvious, drivers are central, not tangential, to Uber and Lyft’s entire ride-hailing business,” San Francisco Superior Court Judge Schulman said in his Aug. 10 order requiring the companies to comply with the law and classify rideshare drivers as employees with all of the benefits to which they are entitled under California law.
The judge went on to dismiss Uber and Lyft’s assertions that they should be allowed to continue operations pending the outcome of the November election, saying, “That Uber and Lyft are attempting to persuade voters to change the law, an effort that may or may not succeed, is no grounds for this court to refrain from deciding the issues before it” and “Defendants are not entitled to an indefinite postponement of their day of reckoning.”
The two companies have become an integral part of residents’ daily lives. Drivers like these independent contractor jobs for their flexible hours and the additional income they provide. Millions of Californians depend on these transportation services.
The Aug. 10 ruling was perceived as a major victory for California lawmakers in their yearlong struggle to enforce AB 5, the controversial worker classification bill that went into effect Jan. 1. Schulman ruled in favor of California Attorney General Xavier Becerra’s argument that Uber and Lyft are violating AB 5, which says workers can only be considered independent contractors if they perform duties outside the usual course of a company’s business.
“The court has weighed in and agreed: Uber and Lyft need to put a?stop to unlawful misclassification of their drivers while our litigation continues,” said Becerra.
An Uber spokesperson said, “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. 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.”
“Ultimately, we believe this issue will be decided by California voters and that they will side with drivers,” Lyft said, referring to Prop 22, the upcoming ballot measure. Voters will decide Nov. 3 if rideshare drivers in California can remain contractors or if they have to become W-2 employees;
Becerra, along with the City Attorneys of San Francisco, Los Angeles and San Diego, filed their worker misclassification lawsuit against Uber and Lyft on May 5, followed by the motion for a preliminary injunction on June 24.
“During this global pandemic, it’s even more important for drivers to get access to protections like unemployment insurance.” said San Francisco City Attorney Dennis Herrera.
Mobile workers agreed with the Shulman’s initial ruling.
“ It’s time for Uber and Lyft to give up their war on their own employees, drop their insulting ballot measure and begin providing us with the wages, healthcare and workers’ rights that we’ve earned,” Robinson said.