By CATHERINE THORBECKE, ABC News
(SAN FRANCISCO) — Lyft announced that it will suspend its ride sharing operations in the state of California, a lucrative market for the company, starting Thursday night.
The dramatic move comes after a California judge said last week that Lyft and Uber cannot classify their drivers as independent contractors instead of employees. Uber and Lyft have vowed to appeal.
The employee classification means that the drivers will be provided with sick leave, overtime pay and other benefits.
“This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips,” the company said of suspending operations in blog post on Thursday. “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.”
In the post, the company argued that most drivers want the flexibility that comes with independent contractor status and the changes would “necessitate an overhaul of the entire business model” saying “it’s not a switch that can be flipped overnight.”
The company also urged customers to vote on a November ballot measure backed by Lyft and Uber that would allow app-based drivers to be classified as independent contractors instead of employees.
“We don’t want to suspend operations,” the company added. “We are going to keep up the fight for a benefits model that works for all drivers and our riders.”
Uber and Lyft have previously argued that their businesses are platforms that connect customers to drivers, rather than transportation companies. San Francisco Superior Court Judge Ethan P. Schulman dismissed that reasoning in his ruling last week, writing that it “flies in the face of economic reality and common sense.”
“To state the obvious, drivers are central, not tangential, to Uber and Lyft’s entire ride-hailing businesses,” Schulman wrote.
Uber and Lyft have also claimed that a vast majority of drivers want the flexibility to create their own hours and more that comes with independent contractor status. Uber has also argued that the need for flexible work is especially critical during the COVID-19 pandemic and the ensuing unemployment crisis.
Uber’s CEO Dara Khosrowshahi threatened in an interview with NBC News last week that it may also temporarily suspend operations in California.
“The court’s ruling is stayed for a minimum of 10 days, and we plan to file an immediate emergency appeal on behalf of California drivers,” an Uber spokesperson said in a statement Wednesday evening.
“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,” the statement added. “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.”
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