Both companies have threatened to temporarily cease operations in California, arguing that classifying drivers as employees would undermine their business models.
Judge Schulman recently denied their request for more time to appeal his decision. If additional appeals are denied or not heard in time, Uber and Lyft plan to discontinue business in California after August 20th.
“If the court doesn’t reconsider, then in California, it’s hard to believe we’ll be able to switch our model to full-time employment quickly,” said Uber CEO, Dara Khosrowshahi.
Uber and Lyft have argued that they provide a technology that connects drivers and passengers but are not hiring entities. While the ride-sharing companies say their drivers prefer their business model because of the flexibility, labor unions and elected officials argue that the model blocks drivers from benefits, such as health insurance, minimum wage, paid sick and family leave, and unemployment insurance. Both companies, along with DoorDash, are funding 22 in an attempt to override AB5 by classifying ride-hail drivers and other gig economy workers as independent contractors. Judge Schulman argued that if Uber and Lyft triumph, “the rapidly expanding majority of industries that rely heavily on technology could with impunity deprive legions of workers of the basic protections afforded to employees by state labor and employment laws.”