A Judge Will Grant a Temporary Stay Requested By Uber and Lyft, Sources Report

A ruling last week found the companies have failed to comply with AB 5, the state’s gig economy legislation

UPDATE: AUGUST 20, 2020, 12 P.M. – Amid threats of service shutdowns and demonstrations from workers, CNBC reports that an appeals court judge has issued a temporary stay which will allow them to continue operating with their current model for the time being.

The stay grants Uber and Lyft through August 25 at 5 p.m. to file new documents. It also orders that, by September 4, the CEOs of both companies will be required to enter sworn statements attesting they have plans in place that would bring their businesses into compliance with AB 5 within 30 days if the appeals court ultimately rules against them in the lawsuit brought by Attorney General Xavier Becerra.

“We’re confident in the facts of our case and look forward to continuing our fight to defend the rights of workers,” a spokesperson for Becerra said following the order.

Experts have speculated since the initial ruling that the companies would try to get a stay that could buy time and push the case until after the November election. The tech giants are backing Prop 22 which, if passed, would grant them an exemption from AB 5.

UPDATE: AUGUST 20, 2020, 10 A.M.  – Just minutes before the scheduled start of a driver protest at LAX calling for rideshare companies to increase pay and benefits for workers, Lyft confirmed that it will suspend operations in California, effective midnight tonight.

In a statement posted to the company website, Lyft claims that treating drivers as employees could increase the fares paid by customers or increase wait times when calling a ride.

The Mobile Workers Alliance intends to move forward with the protest at LAX, planned for 10:30 this morning.

UPDATE: AUGUST 19, 2020 – Uber and Lyft are saying they may “suspend” service in California, perhaps as soon as Friday, following a court ruling that asserted the tech companies are misclassifying drivers. The firms, both based in San Francisco, say it may make more business sense for them to simply stop offering their services in the state, at least temporarily, rather than scramble to bring drivers on as full employees.

“We can’t go out and hire 50,000 people overnight,” Uber CEO Dara Khosrowshahi told the podcast Pivot School. “Everything that we have built is based on this platform that… brings people who want transportation or delivery together. You can’t flip that overnight.”

In a bipartisan joint statement, Mayors Kevin Faulconer of San Diego and Sam Liccardo of San Jose, called today for the court to grant Uber and Lyft’s request to stay the injunction.

“A stay could provide an opportunity for parties to come together with state leaders to negotiate a resolution to this complex issue and avoid irreparable harm upon hundreds of thousands of residents whose lives and livelihoods daily depend on these services,” the statement reads.

The next step for the fight may be moving from the courthouse to the ballot box in November. California Prop 22 would exempt “app-based drivers”–including both rideshare and delivery–from classification as employees.

Backed by tech giants Uber and Lyft, plus Instacart, Postmates, and DoorDash, the ‘Yes on 22’ campaign is expected to be well-financed–as Brandon Castillo, a spokesperson for the campaign, addressed last year.

“We’re going to spend what it takes to win,” Castillo told KCRA. “It’s been widely reported that three of the companies already shifted $90 million, but we’re still in the early phases. The bottom line is: We’re committed to passing this.”

Nonetheless, Gig Workers Rising, an advocacy group which represents drivers and other gig workers, pointed out on Twitter that both Joe Biden and Kamala Harris have advocated against Prop 22–which could bode ill for the measure’s chances on the November ballot, if their supporters turn out to vote in California in large numbers.

While some drivers say they value the flexibility of their relationship with the apps, others say that the flexibility comes at the cost of traditional labor protections and benefits afforded to employees–and that it means little when they feel compelled to work long hours to make enough money to survive.

Another driver advocacy group, Mobile Workers Alliance, has planned a rally for Thursday morning at LAX, part of a coordinated series of protest actions by drivers across the state. Drivers will gather, and use the time to pass out PPE, cleaning supplies, and meals to their peers who have lost work during the pandemic, and may struggle to access benefits due to their status as contractors.

Drivers have to take care of one another, because the companies aren’t doing it. Drivers are working during a deadly pandemic and they can’t get PPE from the companies. Demand for rides has plummeted and, because we’re misclassified, drivers are having trouble getting unemployment insurance,” Mobile Workers Alliance member and Lyft driver Jerome Gage stated in a press release from the group. “Meanwhile, Uber and Lyft are threatening our livelihoods in the media and gig companies are spending more than $110 million on a campaign to roll back workers’ rights.”

AUGUST 11, 2020 – In an injunction issued on Monday, California Superior Court Judge Ethan P. Schulman has found rideshare apps Uber and Lyft have failed to comply with the state’s “gig worker law,” AB 5, in a lawsuit brought by California Attorney General Xavier Becerra, along with the city attorneys of Los Angeles, San Diego, and San Francisco.

While the order does not automatically convert current drivers from contractor to employee status, it is a significant step in the lengthy legal battle between the tech giants–who are seeking to keep workers categorized as independent freelancers–and regulators who want to see those workers treated as full employees.

Uber and Lyft argued that they are fundamentally technology companies, not transportation providers, and that the workers contracted to provide rides are permitted to do so under AB 5 because the rides themselves are outside the scope of the company’s core businesses.

Judge Schulman was unconvinced by that line of thinking, saying that the companies “cannot possibly” justify the claim.

“It’s this simple: Defendants’ drivers do not perform work that is ‘outside the usual course’ of their business,” Schulman’s injunction states.

In press statements issued following the ruling, both companies asserted that they believe that workers prefer to be considered contractors.

“The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law,” Noah Edwardsen, a spokesperson for Uber, wrote on behalf of the company.

Statements issued by both Uber and Lyft cite a specific survey of drivers, published in May by industry website Rideshare Guy, which found that 71 percent of respondents said they wanted remain contractors. The survey, which was conducted by emailing existing subscribers to the site’s mailing list and received only 734 responses, was described by The Washington Post as “independent but unscientific.”

The preliminary injunction has been stayed for 10 days; Uber and Lyft are expected to file appeals.

RELATED: The Lawmaker Behind AB 5 Wants to Change How Food Delivery Apps Operate

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