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Uber and Lyft shutdown in California averted at last minute by appeals court


The ride-sharing companies have bought some time, but they could still leave California

Smith Collection/Gado/Getty Images

After Uber and Lyft threatened to shut down operations in California, an appeals court intervened to grant an emergency injunction preventing enforcement of a California law that requires the ride-sharing companies to reclassify their gig workers as employees.

Lyft announced Thursday afternoon that it was planning to suspend its ride-sharing operations in California at 11:59 p.m. Thursday. Then a last-minute reprieve averted what was threatening to become a midnight shutdown of the ride-sharing services in California.

Hours before Lyft had planned on halting operations in the Golden State, California's 1st Circuit Court of Appeal granted Lyft and Uber more time to comply with Assembly Bill 5, which requires California companies to treat their independent contractors as employees.

"We are glad that the Court of Appeals recognized the important questions raised in this case, and that access to these critical services won't be cut off while we continue to advocate for drivers' ability to work with the freedom they want," an Uber spokesperson said in a statement.

Assemblywoman Lorena Gonzalez (D-San Diego) called the companies' threats to leave California a "mean-spirited tactic to bully Californians into giving the companies a special exemption" from the law, as reported in The Sacramento Bee.

Oral arguments on the appeal are scheduled for Oct. 13. Less than a month later, voters will be able to voice their opinion on the ride-sharing saga at the ballot box.

On Nov. 3, Californians can vote on Proposition 22 in the general election. Prop 22, "App-Based Drivers as Contractors and Labor Policies Initiative," was sponsored by companies that employ gig workers to let citizens decide if independent contractors should be able to operate in California.

In May, California Attorney General Xavier Becerra filed a lawsuit against Lyft and Uber, claiming that the ride-sharing companies violated AB5. The lawsuit alleged the ride-sharing companies deprived gig workers of protections and benefits that typical employees receive. Becerra argued that Lyft and Uber were evading payroll taxes and unemployment insurance for their drivers.

"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 in a statement.

"When they get caught breaking law, the app companies throw a tantrum — using extortion tactics to intimidate elected officials, drivers, and consumers into giving them what they want: a blank check to rewrite laws that work for their bottom line and leave drivers out in the cold," said Mike Roth, spokesman for the No on Prop 22 campaign.

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