Uber and Lyft’s Last-Minute Reprieve From Order to Convert Drivers to Employees

As a San Francisco judge had directed that Uber and Lyft convert their drivers to employees by August 21, 2020,  the rideshare giants were ready to shut down their California operations  unless the Court of Appeal put that order on hold.  See, Traffic Slamming – New Fronts on California’s War Against Uber and Lyft (August 13, 2020).

However, on August 20, the California appeals court did just that, conditionally suspending the injunction for the length of Uber/Lyft’s appeal as long as the companies agreed to accelerate that appeal (both have) and, by September 4, confirm they will switch their California drivers to employees ● if they lose that appeal; and ● if  the voters reject Proposition 22 on the November 3, 2020 ballot.

Proposition 22 proposes extensive amendments to California’s “AB 5” laws to permit a wider scope of independence – along with protections and benefits – for gig economy workers.

Next in this drama will be Uber’s and Lyft’s September 4 sworn commitments to comply with the preliminary injunction if left with no further relief from the trial court’s required conversion of drivers to employees. As they were apparently willing to do last week, the companies might instead announce their determination to shut down all California operations as that last resort instead of converting.

To minimize state or worker challenge to their hiring practices, smart California businesses contemplating or continuing independent contractor classification should consult a management-side employment attorney to advise on how the law – and the current uncertainties surrounding Uber and Lyft drivers – affect their plans.

See also:

• Is Gig Up for Car Wash Company? – First AB 5 Suit Challenging Independent Contractor Classification (July 30, 2020)
• Calling Out Big Gig – California Wants Uber and Lyft Drivers as Employees (May 22, 2020)
• Roadkill – Federal Court Denies Uber Request to Stop AB5 (February 21, 2020)
• The Mystery of it All – Employed or Independent? California Offers AB5 Answers (February 7, 2020)
• Dodging the Bullet – The Industries and Professions Not Subject to California’s New Independent Contractor Restrictions (October 9, 2019)

For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

Helena Kobrin

August 27, 2020