Come midnight tonight, Lyft drivers and passengers in California will have to look elsewhere for on-demand rides.
The San Francisco-based company announced Thursday its decision to stop all ride-hailing operations in the state as soon as this Friday. This decision will only affect riders and drivers in California. Bicycle, car rental, and e-scooter services will continue operating as usual through the Lyft app. Lyft said drivers and riders were notified about the suspension this morning.
The shutdown stems from a legal battle over employee classification. Lyft, along with ride-sharing competitor Uber, is fighting to keep its drivers classified as independent contractors without offering them benefits like sick pay and healthcare. A state law, known AB 5, forces app-based companies with a gig workforce to start treating workers as full-time employees. California filed a lawsuit against Lyft and Uber earlier this year which led to the current Aug. 20 deadline to comply with AB 5.
In a blog post, Lyft wrote about the potential consequences of reclassifying its employees: “This change would also necessitate an overhaul of the entire business model — it’s not a switch that can be flipped overnight.”
Uber hasn’t officially notified its drivers and users about whether it’s moving forward with an impending shutdown in the state, too. But on a recent New York magazine Pivot Schooled podcast episode, Uber CEO Dara Khosrowshahi strongly indicated that the company was likely to suspend operations through at least November.
But don’t despair CA! “We’re going to figure out a way to be in California. We want to be in California.” @dkhos says Uber engineers are “figuring out how we can rebuild this thing” to be on an employer model. Warns there will be fewer drivers and higher-cost rides.
— Sasha Lekach (@sashajol) August 19, 2020
Lyft is also framing its decision as the only option. “We don’t want to suspend operations. We are going to keep up the fight for a benefits model that works for all drivers and our riders,” the blog reads.
Lyft and Uber are backing a state ballot initiative, Prop. 22, that would keep drivers classified as independent workers with some limited benefits.
To protest the move, workers from the driver advocacy group Gig Workers Rising are organizing a rally at Uber headquarters in San Francisco this afternoon. A Gig Workers Rising press release noted that drivers plan to “display a giant, 8 ft inflatable baby outside of Uber HQ to highlight how these ultra-wealthy corporations and their CEOs are choosing to act like petulant children, threatening to ‘take their ball and go home’ if they don’t get their way.”
“This childish behavior is unacceptable,” said Edan Alva, a driver with Gig Workers Rising.