Uber and Lyft service will continue — for now — after the companies won a last-minute reprieve from an appeals court from having to turn drivers into employees starting Friday.
The appeals court on Thursday temporarily halted a preliminary injunction that would have forced the companies to stop treating drivers as independent contractors. But the court said Uber and Lyft must prepare to reclassify drivers soon in case they lose future legal rulings and a crucial election.
Both companies had said they would halt ride-hailing in the state at midnight Friday if the injunction, which was slated to take effect at that time, remained. They said that pause would last at least until November, when voters weigh in on Proposition 22, their ballot initiative to permanently enshrine gig drivers and couriers as independent contractors.
California’s First District Court of Appeals stayed the injunction, which has never taken effect, until it rules on an appeal by the ride-hailing companies. The court scheduled oral arguments on the appeal for Oct. 13.
“We are glad that the Court of Appeals recognized the important questions raised in this case, and that access to these critical services won’t be cut off while we continue to advocate for drivers’ ability to work with the freedom they want,” Uber said in a statement.
San Francisco Superior Court Judge Ethan Schulman issued the preliminary injunction Aug. 10 but stayed it for 10 days, giving Uber and Lyft time to appeal, which both companies did.
California Attorney General Xavier Becerra and three city attorneys sought the injunction in connection with a lawsuit they filed against Uber and Lyft in May, alleging that the ride-hailing companies violated AB5, California’s new gig-work law. The lawsuit said by keeping Uber and Lyft drivers as independent contractors, the companies deprived them of the protections and benefits of employment.
Uber and Lyft took advantage of the injunction to mount a public relations campaign, warning riders and drivers that service could soon be suspended and urging them to support Prop 22 to keep it going.
Lyft briefly set social media on fire after issuing a blog post Thursday morning saying, “At 11:59PM PT today our rideshare operations in California will be suspended,” without explaining that the suspension was not certain.
Uber and Lyft had said they couldn’t simply “flip a switch” and hire their tens of thousands of drivers. But Judge Schulman and the plaintiffs’ side said they’d had ample warning that California laws could force them to reclassify drivers and had chosen to drag their feet.
A 2018 California Supreme Court decision called Dynamex made it harder for companies to claim that drivers are independent contractors. It was codified and expanded by AB5, the gig-work law that took effect Jan. 1. Uber and Lyft contend that AB5 does not apply to them and want to make that point in court.
But meanwhile, the appeals court said Uber and Lyft have to be ready to reclassify drivers.
By Sept. 4 each company must submit a sworn statement from its CEO “confirming that it has developed implementation plans under which, if this court affirms the preliminary injunction and Proposition 22 on the November 2020 ballot fails to pass, the company will be prepared to comply with the preliminary injunction within no more than 30 days after issuance of the remittitur in the appeal,” the court wrote.
Uber Eats, the company’s restaurant delivery service, was not affected either way.
Both companies are operating at a fraction of their usual capacity. with most riders sheltering at home and many drivers fearful of contagion.
Carolyn Said is a San Francisco Chronicle staff writer. Email: csaid@sfchronicle.com Twitter: @csaid
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Uber, Lyft win last-minute reprieve: Ride-hailing to continue in California - San Francisco Chronicle
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