For those who live in California and incorporate Uber and Lyft into their daily lives, you may need to start thinking of other options because the ride-share giants may shut down their operations as soon as this weekend for failure to classify drivers appropriately.
According to reports, this comes after a new bill, “Assembly Bill 5” was passed last year. The bill states that workers can generally only be considered contractors if they perform duties outside the usual course of a company’s business. Taken into effect this past January, the law makes the companies responsible for overtime, health care, etc.
Whether or not the shutdown happens depends on if a state judge grants them an appeal or more time to reclassify their drivers from contractor to employees, even though they’ve had almost a year to do so.
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If they lose or there is no ruling by Thursday, the ride-sharing giants will no longer be in service in California–at least temporarily.
“At first I thought this was an empty threat,” said Mark Shmulik, an analyst at brokerage firm AB Bernstein. “But assuming appeals court says ‘no’, I actually do believe Uber and Lyft will shut down temporarily in California.”
This isn’t the first time Uber and Lyft have faced this challenge. Outside of fighting taxis and lobbyists, the two companies pulled out of Austin, TX in 2016 and later came back, according to Fortune.
“Uber and Lyft left Austin in 2016 after the city rejected a proposal that would have allowed the services to perform their own background checks on drivers. But one year later, after the public complained to get the services back, the state overrode local regulations in favor of Uber and Lyft.”
Lyft and Uber possibly shutting down in California during a pandemic? 2020 is surely taking everything away.
