Rideshare companies Uber and Lyft say they’re prepared to temporarily shut down operations in California as soon as Friday.
The move comes after a California judge last week ordered the companies to classify drivers as employees instead of independent contractors— a shift that would guarantee benefits like overtime, sick leave and expense reimbursement for workers who make up much of the freewheeling gig economy. The ride-hailing companies were given until midnight this Friday to make the change.
Advocates praised the ruling as a milestone in their fight to apply traditional worker protections to a fast-growing segment of the labor force. But the companies criticized the decision, saying it threatens to shut them down during a pandemic-induced economic downturn where many people who have lost their jobs turn to the ride-hailing companies to make money.
The lawsuit was filed back in May by California Attorney General Xavier Becerra and the city attorneys of Los Angeles, San Diego and San Francisco under a new California law that says companies can only classify workers as contractors if they perform work “outside the usual course” of their business.
The law has wide-reaching implications across a number of sectors, but none more so than the ride-hailing industry. The companies have already challenged the law in federal court, where their efforts to stop it from taking effect have, so far, failed. And they have pledged to spend more than a hundred million dollars to support a ballot measure in November that, if approved by voters, would exempt them from the law.
With files from the Associated Press