The appellate court’s decision comes just one day after Lyft said it would suspend its operations in the state, the Associated Press reports.
What We Know:
- On Monday August 17th, a lower court ruled that Lyft and Uber, the two largest ride-hailing companies in the world, would have to reclassify their driver‘s as employees. The decision would have required each company to provide drivers with protections like minimum wage, overtime, sick leave, unemployment, and health insurance.
- Lyft announced Thursday that it would no longer provide rides in California as a result of the court’s decision and Uber CEO Dara Khosrowshahi said the law would require Uber to shut down operations as well.
- However, an appeals court’s decision Friday has allowed both companies to continue their operations, allowing them to classify their drivers as private contractors. Both Lyft and Uber plan to operate as usual with the court’s decision giving them more time to formulate a plan.
- The lower court’s decision would have had serious ramifications on the companies and their potential earnings. California drivers accounted for 9% of Uber’s rides and food delivery before the COVID-19 pandemic. Lyft, which is not an international corporation outside of the U.S. and Canada, would have been hit even harder. The Golden State made up 21% of their rides pre-corona, a number which has since dropped to 16%.
- California Attorney General Xavier Becerra, who fought to require the companies to reclassify their drivers, doesn’t show any signs of giving up. He stated, “We’re confident in the facts of our case and we look forward to continuing our fight to defend the rights of workers across the state.”
The decision comes as big tech companies around the world are having their practices called upon for adjustments by lawmakers. Just a few weeks ago, CEO’s from Apple, Facebook, and Amazon were brought to Washington, D.C. to testify before Congress.
