Uber and Lyft announced on August 20, 2020 that their rideshare services in California will continue, at least for now. Prior to that, both companies stated that shutting down would be necessary in order to comply with a recent court order requiring them to reclassify their drivers as employees.
The fiasco began last year when California Assembly Bill, AB-5, was signed into law. The bill was intended to force companies such as Uber, Lyft, Grubhub, to classify their drivers as employees as opposed to independent contractors. As employees, drivers will be entitled to minimum wage, healthcare coverage, paid leave, unemployment insurance and other benefits.
The law went into effect as of January 2020; however, Uber and Lyft have not comply with the law and continue to treat their drivers as independent contractors. In a lawsuit against both companies, brought by California Attorney General Xavier Becerra and City Attorneys for Los Angeles, San Diego and San Francisco, the judge ruled on August 10, 2020 in favor of an injunction that prevents the companies to classify drivers as independent contractors. Uber and Lyft had 10 days to comply. Instead, they filed an appeal. Hours before the 10-day deadline, the judge granted a temporary reprieve allowing both companies to operate as usual.
The latest order sets out new deadlines for the companies. By September 4, 2020, sworn statements must be submitted by both companies to provide plans on how to comply with the law. Oral arguments are scheduled for October 13, 2020.
For the time being, Uber and Lyft are able to operate their services as usual. However, with the pending lawsuits, the future of ride-hailing services in California is yet to be seen.