Uber, Lyft denied extension to make drivers employees in California

Threats to abandon the state face Aug. 20 deadline  

The clock is officially ticking on the fate of Uber and Lyft continuing to operate in California after a judge Thursday denied the ride-sharing companies' request for an extension of a 10-day stay following a ruling that drivers of the ride-hailing companies must be classified as employees instead of independent contractors.

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At a hearing in San Francisco Superior Court, Judge Ethan Schulman said he was "unconvinced that any extension of the 10-day stay is required."

If both companies are forced to re-classify drivers, it would force both to offer employee benefits such as overtime, sick leave and expense reimbursement drastically increasing company costs.

TickerSecurityLastChangeChange %
UBERUBER TECHNOLOGIES INC.36.49-0.63-1.70%
LYFTLYFT INC.28.90-1.69-5.52%

UBER MAY BE FORCED TO SHUT DOWN CALIFORNIA RIDE SERVICES OVER NEW DRIVER RULING

A spokesperson for Uber told FOX Business that they intend to immediately file an emergency appeal to the ruling.

“The court’s ruling is stayed for a minimum of 10 days, and we plan to file an immediate emergency appeal on behalf of California drivers," the spokesperson said. "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. When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression.”

The company added that, given the 10-day stay, it does not anticipate any major changes to Uber for drivers, riders, and merchant partners across California, and that it expects to have a longer-term stay throughout the course of the appeal."

Uber said it will not be able to reclassify and hire more than 100,000 drivers in a matter of days. In addition, it plans to send messages to its partners and customers in California to limit confusion about their access to the platform and services.

While Lyft declined to officially comment, the company also has the option to file with the appellate court and will likely do so.

The ruling remains stayed through August 20.

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Both Uber and Lyft have previously threatened to suspend operations in California if their efforts to extend the stay is unsuccessful.

A recent Uber analysis found that "rider prices would need to increase"  25% to 111% across California to cover increased costs.

"These higher prices would of course reduce demand for trips, thereby shrinking the amount of available work for drivers, and constraining where Uber is able to provide a reliable service," the company wrote. "We estimate reduced demand leading to 23–59% trip loss across our California markets, with the greatest impacts in sparse areas."

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