Uber will not suspend ride sharing in California, thanks to an 11th hour court of appeals ruling. California-based Uber and Lyft drivers can breathe a sigh of relief and will be able to continue ride sharing services for the time being, but there is still work to be done.

On August 20, the 1st Appellate District Court granted appeals to both Uber and Lyft.

“The petitions are granted and the preliminary injunction is stayed pending resolution of Lyft and Uber’s appeals, subject to the condition that, by 5:00 p.m. on August 25, 2020, Lyft and Uber shall both file written consents to the expedited procedures specified herein.”

While there is still a long road ahead for both these companies, Lyft acknowledged the legal victory in an update on its website.

“Rideshare is ON. The California court has granted our request for a further stay, so our ride share operations can continue uninterrupted, for now. Thanks to the tens of thousands of drivers, riders, and public officials who urged California to keep ride share available for so many people who depend on it.”

Earlier this week, Uber announced that it may need to suspend service in California after a California Superior Court judge ruled that Uber and Lyft must reclassify “app-based drivers” as employees, and not independent contractors.

In an undated blog post, Uber addressed its plan to move forward.

“We may have to temporarily suspend ride sharing in California starting this week. The California Attorney General obtained a court order that requires ride share companies to hire drivers as employees — immediately — or else shut down,” the post reads.

Prior to the Aug. 20 appeal ruling, the court found that both Lyft and Uber were in violation of AB 5, which regulates how employees and independent contractors are classified. AB 5 established a three-factor test to decide a worker’s status as an independent contractor:

  • The worker is free from the hiring company’s control and direction in the performance of work.
  • The worker is doing work that is outside the company’s usual course of business;
  • The worker is engaged in an established trade, occupation, or business of the same nature as the work performed.

A California Superior Court judge ordered both Uber and Lyft to reclassify its drivers as employees, immediately or shut down.

However, while remaining compliant was on the mind of Uber CEO Dara Khosrowshahi, he seriously doubted the company’s ability to hire all drivers as employees.

“We can’t go out and hire 50,000 people overnight,” Uber CEO Khosrowshahi told the podcast Pivot School.

While Uber and Lyft will not suspend service in California for now, the companies must lobby for voters to help them defeat AB 5 with Proposition 22 in November. As the election nears, Lyft has included a “Vote Yes on Proposition 22” section of its website.

“If we had to overhaul our business model, riders would almost certainly experience dramatic changes too — prices would go up, wait times would increase, and service would not be available in many areas. This would result in thousands of Californians being stranded without affordable and dependable transportation at a time when travel options are limited.”

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