Economy

Uber and Lyft Might Stop Operating in California Over Court Ruling

Uber and Lyft have been given a 10-day deadline after a California court’s ruling demanding the ride-sharing companies to change their drivers’ independent-contractor status to employee status, including providing them health insurance and minimum wage. The companies are appealing the court decision, although they have already lost a bid to extend the 10-day stay.

Uber and Lyft To Leave California?

Both ride-sharing platforms could be leaving the state which remains a huge market for the two companies. Should Uber and Lyft suspend operations in California, thousands of drivers will lose a source of income, and thousands of customers will lose their preferred way of transportation.

Gig platforms have grouped up to back Proposition 22 – a California ballot initiative aimed at exempting such companies from reclassifying their contractors as employees. The question, however, won’t be put to voters until November, leaving companies with no choice but to suspend operations until the results of the initiative.

The timing is good as revenue impact has been heavily affected by the pandemic, with rides being down over 80% in California for both companies, data from research firm Second Measures shows.

“Our focus is on Prop 22, and we are confident in moving that forward,” - Lyft’s president, John Zimmer

So far, Uber, Lyft, Instacart, DoorDash, and Postmates have raised over $110 million for Proposition 22. If the initiative passes it would make their drivers eligible for healthcare subsidies, vehicle insurance, and minimum earnings, but would keep their status as contractors and not employees.

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