LOS ANGELES (CBSLA) — Rideshare companies Lyft and Uber were granted an emergency stay Thursday that delayed an announced suspension of services in California over the state’s controversial Assembly Bill 5.
Earlier Thursday, Lyft announced it would suspend service in California in response to the ongoing legal battle over whether its drivers are classified as independent contractors or employees.
Lyft wrote in a blog that its operations in California will be suspended beginning at 11:59 p.m. Thursday.
“This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips,” the company said in a statement.
But Thursday afternoon, a California appellate judge granted an emergency on a preliminary injunction issued last week requiring both companies to reclassify drivers as employees.
The companies have until September to outline plans for classifying drivers as employees in the event they lose the appeal.
Earlier this week, Uber warned its users that it may also suspend its operations in California beginning Thursday night.
The actions are in response to a federal judge’s ruling on Aug. 10 that Uber and Lyft must classify their drivers as employees rather than independent contractors. That ruling is scheduled to take effect Thursday.
The ruling was in response to a lawsuit brought by several city attorneys and California Attorney General Xavier Becerra, which alleged that the companies violated AB 5 and were misclassifying drivers’ employment statuses to prevent them from receiving proper compensation and benefits.
The California Legislature passed AB 5 last September, a law which requires companies who employ gig workers, such as rideshare drivers, to reclassify them as employees, affording them benefits including minimum wage, overtime and unemployment insurance.
Despite all the legal wrangling, California voters are set to decide the fate of AB 5 in less than three months when they vote on Proposition 22.
Prop. 22, a bill heavily pushed by Uber and Lyft, would overturn provisions of AB 5 specifically relating to app-based drivers.
Under Prop. 22, instead of being categorized as employees, drivers for app-based companies would remain independent contractors but be provided with “alternative benefits,” including a guaranteed minimum level of pay and healthcare subsidies, all based on how much they drive. It would also restrict local regulation of app-based drivers, criminalize impersonation of such drivers and require background checks.