Lyft and Uber get permission to continue operations in California
Lyft Inc. and Uber Technologies Inc. secured a suspension of injunctive relief on companies in California, which would allow them to continue rather than stop working in the state or convert drivers to employees rather than independent contractors. Writes about it Fox Business.
Shares of both companies rallied sharply on the news after falling in anticipation of closing operations.
Companies must submit written statements of consent to certain expedited procedures as ordered by the judge by 17:00 pm on 25 August. If they don't, the suspension of the injunction will be lifted at 17:00 pm on 25 August.
“For now, our operations may continue uninterrupted,” Lyft said in an update. “Thank you to tens of thousands of drivers, passengers and government officials who have called on California to keep travel affordable for so many people.”
Compliance with the lawsuit against companies and reclassification of drivers would lead Lyft and Uber to treat independent contractors as full-time employees and provide them with benefits that would make them more expensive for companies to work.
“Our California operations will be suspended at 23:59 pm today,” Lyft said Thursday, August 20. “We don’t want to do this because we know that millions of California residents depend on Lyft.”
Lyft has been providing drivers with a minimum income guarantee and a healthcare subsidy for years, allowing them to be independent contractors. The company said the new law will result in 80% of drivers losing their jobs, while the rest will have scheduled shifts and an hourly wage cap.
In addition, Lyft says it will make travel expensive for passengers in low-income areas where transit options are limited.
The companies have created Proposition 22. If adopted, it will provide drivers with the benefits and schedule flexibility they are looking for while maintaining the current hiring model.
Earlier in August, Lyft reported that in the three months to June, passenger numbers fell 60% from the same period last year as quarantines aimed at slowing the spread of COVID-19 canceled non-essential travel.
As ForumDaily wrote earlier:
- August 2 Uber and Lyft saidthat may close their operations in California.
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