Lyft made the decision to suspend its transportation service in California this Thursday due to a court order in the state
Lyft will suspend its ride service in California on Thursday following a court order in the state, probably its largest market, requiring it and rival Uber to reclassify drivers as employees.
The company noted in an update on its website: As a result of a court order, we will suspend carpooling across California at 11:59 p.m. Pacific time on Thursday, August 20. We did our best to prevent this from happening and keep Lyft available to you, but it was not possible to review our business model and operations within ten days.
San Francisco Superior Court Judge Ethan Schulman ruled Aug. 10 that private transportation companies must begin classifying their drivers as employed in the state. The judge said the court order against the companies would not be enforced for 10 days to give them a chance to appeal, something both companies said they are doing.
Lawsuit against Lyft and Uber
The court order is part of a lawsuit against Uber and Lyft filed by the state of California in May. The lawsuit says the companies “exploited hundreds of thousands of California workers” by classifying drivers as independent contractors and are violating California’s AB 5 worker classification law, which took effect in January.
Uber and Lyft classify their drivers as independent contractors, which means that workers pay for their own expenses, such as gas, car maintenance and insurance. Drivers also don’t have job benefits like minimum wage, health insurance, or paid sick leave. If they were classified as employees, many of those costs would be borne by companies.
Both Lyft and Uber said last week that if California forces them to classify their drivers as employees, they will suspend operations in the state.
Lyft noted on its website that people can still use the Lyft app to access bikes, scooters, car rentals, and public transportation information.
In a blog post Thursday, Lyft also urged people in California to support a ballot measure that companies support called Proposition 22. In total, Uber and Lyft, along with Doordash, Postmates, and Instacart, have put up 110 million dollars behind the measure. The proposal, which will be put to a vote in November, seeks to exempt gig economy companies from AB 5.
Uber did not immediately respond to a request for comment.