Lyft Backtracks on California Shut Down After Appeals Court Grants Delay

On Thursday, Lyft announced in a blog post that it would be suspending ride-hailing operations in California effective 11:59 PT. Hours later, after a favorable court ruling, the company backtracked and said it would remain open.

The company’s whiplash follows threats from the company and its competitor Uber to temporarily exit California after a judge ruled that the companies must begin classifying drivers as employees on Friday. The companies asked for a delay in the ruling taking effect in order to appeal it, which was granted on Thursday afternoon. Now, Uber and Lyft have backed off their threat and say they will continue to operate in California.

The companies have until August 25 at 5 p.m. to submit sworn statements confirming they’ve crafted plans to reclassify drivers as employees within 30 days if the appeals court upholds the August 10 injunction. Oral arguments could begin as soon as October 13, ABC News reported.

Aside from the pending appeal, the next big obstacle in California is expected to be the November vote on Proposition 22, a law backed by gig economy companies including Uber and Lyft that would exempt them from classifying drivers as employees.

In its blog post announcing the would-be shutdown, Lyft pointed the finger at politicians and said it would continue to push for alternatives to classifying drivers as employees.

“This is not something we wanted to do,” the company stated, “as we know millions of Californians depend on Lyft for daily, essential trips. We’re personally reaching out to riders and drivers to share more about why this is happening, what you can do about it, and to provide some transportation alternatives.”

Lyft’s blog post argued that reclassification is not "a switch that can be flipped overnight." Under California law, drivers have been employees since a 2018 California Supreme Court decision and explicitly since Assembly Bill 5—which codified the decision—went into effect at the start of this year.

Lyft’s ride-hailing operations have been hit hard by the pandemic, with its second quarter earnings report showing that rides were down nationwide by nearly 60 percent, revenue down by over 50 percent compared to the same time last year, and even larger losses.

Lyft has an estimated 350,000 drivers in California, choosing to rather leave its workforce without a source of income in the midst of the worst pandemic on record and record unemployment instead of abide by the law.

Also on Thursday, a coalition of driver advocacy groups in California held a statewide day of action to protest efforts by Uber and Lyft to suspend operations, instead of comply with California law and provide drivers with a minimum wage, benefits, and protections associated with employee status.

Uber and Lyft did not immediately respond to Motherboard’s request for comment about the appeals court ruling.

Update: An earlier version of this article was headlined: ‘Lyft is Shutting Down in California at Midnight, Company Says.’ Lyft backtracked after a favorable ruling, and this article was updated with the latest information. The headline was changed to reflect these facts.