US Court Grants Uber and Lyft Drivers Reclassification Extension Until October... Avoiding Business Suspension

California Court of Appeal
"Classify Drivers as Employees, Not Independent Contractors"
Uber and Lyft Previously Announced Suspension of Operations in Response

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Ride-sharing service companies Uber and Lyft received an emergency injunction from a California court just hours before their planned suspension of operations in the state.

Previously, Uber and Lyft were issued a preliminary order by the San Francisco Superior Court in California to classify their drivers as employees. However, they opposed this ruling and announced plans to halt operations starting from the 21st (local time).

According to the Wall Street Journal (WSJ) on the 20th (local time), the California Court of Appeal approved an emergency injunction against the court decision requiring Uber and Lyft to treat drivers as employees rather than independent contractors. This ruling grants Uber and Lyft additional time until October.

The Court of Appeal ordered Uber and Lyft’s CEOs to submit a declaration by the 4th of next month as a condition for the emergency injunction approval.

The declaration must include the companies’ plan to comply with the trial court’s decision within 30 days if the Court of Appeal upholds the ruling that drivers should be classified as employees and if the ballot initiative they are promoting does not pass.

If they do not agree, the emergency injunction will expire on the 25th. If the declaration is submitted, both companies can continue operating in California as usual while the appeal proceeds.

The court’s injunction decision has eased some pressure on Uber and Lyft. Their business performance was hit hard by the COVID-19 pandemic, and a suspension of operations in California, which accounts for the largest portion of their revenue, would have caused significant damage. California accounts for 9% of Uber’s and 16% of Lyft’s global ride-sharing revenue.

An Uber spokesperson said regarding the Court of Appeal’s decision, "We are pleased that access to this critical service can continue while we advocate for drivers’ ability to work freely."

Some express ongoing concerns, noting that although the California Court of Appeal extended the deadline for reapplying driver status classification for Uber and Lyft, the final verdict remains uncertain. If the appellate court upholds the Superior Court’s decision, it could lead to a trend of classifying drivers as employees not only in the U.S. but also for ride-sharing companies worldwide.

Currently, Massachusetts has filed a similar lawsuit against Uber and Lyft as California did, and Uber drivers in Europe are reportedly pursuing lawsuits demanding extensive employee benefits.

Meanwhile, Uber and Lyft, along with food delivery company DoorDash, have initiated a ballot measure to be exempted from the California law.

California residents will vote on this ballot initiative during the upcoming November presidential election.

This content was produced with the assistance of AI translation services.