Earlier this month, both Uber and Lyft were ordered by a judge in California to classify their drivers as employees. This prompted Uber and Lyft to consider temporary shutdowns in California.
Uber CEO Dara Khosrowshahi in fact stated on August 12, one day after the order, that a temporary shutdown was likely to happen because the company couldn’t convert drivers to employees over night.
Earlier this morning, Lyft even made an official statement that a shutdown was happening until further notice. But, The Verge now reports that a different judge has now blocked the order to classify drivers as employees, which gives both companies a bit of breathing room.
This should mean that no shutdowns will happen, at least for now. As the blocked order will not hold forever and both companies still need to address the issue.
Uber and Lyft shutdowns in California are on hold through the appeals process
The big thing here is that Uber and Lyft won’t have to shutdown for the moment. The blocked order will allow them to stay in operation at least through the appeals process for each company.
This means that until that whole situation is finalized or moves beyond the appeal, drivers will still be allowed to work.
Shutdowns were expected to happen at midnight on August 20. Now though both companies will have until October to figure everything out. Still, shutdowns may come back into play if neither company is able to get the order dismissed.
Drivers and riders both rely on rideshare services like Uber and Lyft on a daily basis. San Francisco for example is one of the busier cities for both. As both companies originated there.
And although the fight to become employees seems like it would benefit drivers and riders in the long term, in the short term it would put a lot of people out of work should a shutdown happen. Not to mention it will negatively impact a lot of riders who rely on those services to get to their own jobs.
Uber and Lyft feel that drivers prefer the freedom of being a contractor
Both rideshare companies have advocated for drivers preferring to have the freedom that being a contractor affords them.
Uber also made an official statement in response to the blocked order. Saying that they were pleased with the decision that recognizes the importance of drivers having this freedom and the ability to continue working.
But the blocked order is simply a stopgap. Both Uber and Lyft will still need to find a solution. And they only have a couple of months to do so.