Californians are still able to order rides from Lyft and Uber this morning after an eleventh-hour decision by a state appellate court judge allowed the TNCs to continue operating with their drivers as contractors instead of employees. The two companies had announced they would suspend services as of 12:00 a.m. PDT as a result of Assembly Bill No. 5, which has implemented new tests as to how workers are classified.
The TNCs are being sued by the state to reclassify their drivers as employees and were facing an injunction set to go into effect today. The judge has stayed the injunction pending the firms following certain legal procedures and submitting contingency plans for reclassification — we should learn more about the latter by September 4. Lyft and Uber sent statements to TechCrunch applauding the decision.
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. In the U.S., employers are responsible for paying out a minimum wage, benefits, and a share of taxes when they hire an employee, but not a contractor. Opponents of the bill say that it takes away the flexibility of contractors who want to work the hours they want with as many clients as they please and also burdens companies' job capacity. The bill was signed last year and went into effect on January 1. You can read the full text here.
Uber had been trialing the ability for its California drivers to set their own fares in an attempt to fulfill one of AB 5's tests.
Lyft and Uber along with DoorDash are pushing for an exemption to AB 5's requirements for their workers in the form of Proposition 22 where a "yes" vote would carve out a space for app-based drivers. If the initiative fails in the November general elections and if the stay has remained in place through then, the companies will need to comply with the injunction within 30 days.