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A California judge has granted Uber and Lyft emergency relief from an order requiring them to treat their drivers as employees. Companies faced a Thursday deadline to fulfill the order. Lyft announced today that it will be forced to close the state at midnight tonight.
Lyft said it was forced to cease operations in California by a 2019 California law, AB 5, forcing hail shipping companies to treat their drivers as employees rather than independent contractors. Uber had warned that it would likely do the same if the courts didn't delay enforcing the law.
"This is not something we wanted to do, knowing that millions of Californians depend on Lyft for daily, vital travel," Lyft wrote. However, the new law would "require a revision of the entire business model – it is not a switch that can be thrown overnight".
The judge's emergency stay means Lyft and Uber can continue to operate on their current model while they continue to argue over whether the new law applies to them.
Uber says employee status will be bad for drivers
Lyft and Uber have traditionally treated their drivers as independent contractors, which means they did not receive benefits like minimum wage, expenses compensation, unemployment insurance and overtime pay.
The current model is good for Uber and Lyft, and the companies argue that many drivers also benefit from the freedom it offers. Uber and Lyft drivers can log into the app anytime, anywhere, work for as long as they want, and then log out. You can also work for several companies at the same time.
This has obvious advantages over most traditional jobs, where workers are usually expected to commit to a specific schedule in advance. Many Uber and Lyft drivers cite this flexibility as the main reason for choosing this industry.
Critics point out that labor law does not require employers to set fixed schedules for their employees. That's technically correct, but Uber has argued that the fact that drivers are employees undermines the autonomy that drivers enjoy today.
"There isn't a large company in the state of California or across the country where hourly workers can work the way drivers currently do with Uber," Uber economist Alison Stein recently wrote in a blog post. "Starbucks offers one of the most flexible part-time jobs, but baristas can't just step in unannounced, they just make lattes while declining all orders for cappuccino, and leave during the morning rush to pick their child up from school (without their boss's permission) and return to work at a Peet & # 39; s Coffee. "
"Imagine a restaurant that gives its employees the same freedom that drivers currently have with Uber," she added. "Each night there could be a single waiter trying to serve 100 customers or 100 waiters, all serving one customer. While a dish is being prepared, the chef could go to cook for the food truck across the street anytime the employees decided to work a shift, they had to be paid, regardless of whether they had work or the restaurant was closed. "
At the very least, Lyft and Uber say the higher cost of running the service will force them to raise tariffs and cut service areas. Some customers get a discount so less work is required
Ultimately, this is a question that will be decided by California voters in November. Uber and Lyft have sponsored a voter initiative that gives hail drivers some, but not all, employee rights while retaining most of the flexibility of independent contracts.