Over and Lyft have lost their offer to postpone an injunction that will force the two mobile app companies to reclassify drivers as employees. A California Supreme Court judge on Thursday denied the companies' motion to postpone the August 20 enforcement order.
The decision creates the conditions for litigation and will most likely require both companies to temporarily cease operations in California if they cannot extend their stay. Uber confirmed with theinformationsuperhighway that it plans to appeal as soon as possible. Lyft said in an email that it will apply for another residency immediately with the appeals court and will file that application by the end of this week.
On Monday, California Supreme Court Justice Ethan Schulman issued an injunction forcing Uber and Lyft to classify their drivers as employees. This order is due to take effect on August 20th. The judge acknowledged that the order would "significantly" change the nature of Uber and Lyft's business practices and would be "costly" to implement. However, these difficulties were not enough to deter the court from classifying drivers as employees. That decision would force Uber and Lyft to offer unemployment insurance and other benefits.
California Attorney General Xavier Becerra, along with city attorneys from Los Angeles, San Diego and San Francisco, brought the lawsuit against Uber and Lyft to force the companies to comply with AB 5.
Uber's attorneys filed a motion to suspend an injunction while the appellate court rules the decision on the decision. The lawyers argued that "Uber will almost certainly be forced to shut down the Rides platform in California when the injunction goes into effect, which would irreparably harm Uber and anyone who relies on the Rides app." Generate income for them and their families – especially in the middle of a pandemic. "
Both companies commented this week that operations will have to cease if the stay is not extended. That could lead to a more dramatic move – at least from Uber, which has threatened to leave California for good.
As these legal battles play out, Uber and Lyft also plan to endorse Prop 22, a move voters can approve or reject in the November election.
Prop 22 would require companies like Uber and Lyft to put a number of safeguards in AB 5. The measure states that drivers must receive an income guarantee of at least 120% of the minimum wage while they work, 30 cents per mile for expenses, a health grant, occupational accident insurance for workplace injuries, protection against discrimination and sexual harassment, and car accident and liability insurance.
There's one key difference that makes it attractive to Uber and Lyft: Prop 22 would classify drivers as independent contractors.