In a stunning preliminary injunction issued on August 10th, a California judge ruled that Uber and Lyft must classify their drivers as employees. Uber said it planned to file an immediate emergency appeal to block the ruling from going into effect.
Both companies have appealed the decision of a judge who responded to the request of the state prosecutor's office for drivers to be classified as employees, applying the law in force since January of labor reclassification.
Although Uber and Lyft have lost that trial, during the appeal they will be able to maintain their current work structure and have permission, for the time being, to maintain their current operations in California despite announcing their cancellation Thursday night.
The AB5 law, legislation that establishes conditions and guidelines to consider who is legally an independent contractor and to whom this category is applied without being one, was approved in September 2019 and its objective is that companies do not use this classification to avoid complying with the protections involved in employment contracts.
Uber and Lyft argued that the law could not be applied to them because drivers were not doing core tasks for these companies since, according to their defense, they are not in the business of private transport but rather in providing a digital market platform for drivers to use.
Uber CEO Dara Khosrowshahi said, in an interview on MSNBC that, that if the court does not overturn the recent ruling, the Company will likely shut down temporarily in California for several months until November, when voters in the state decide on Proposition 22, which If passed, would label app-based drivers as independent contractors rather than employees.