Local drivers face possibility of rideshare shutdown by end of week

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SAN DIEGO (CNS) – San Diego Mayor Kevin Faulconer joined San Jose Mayor Sam Liccardo Wednesday to urge an appeals court to stay an injunction that they said would lead to a statewide shutdown of Uber and Lyft’s operations starting this Friday.

The rideshare companies recently lost a court battle regarding Assembly Bill 5, with a judge ruling the companies must classify their drivers as employees rather than independent contractors in order to comply with the law, which went into effect Jan. 1.

“It hurts me to know about this because I love the platforms,” said Albert Porche, who has been driving for the rideshare companies for more than 3 years.

Under AB-5, companies must prove workers are free from company control and perform work outside the usual course of the company’s business in order to classify workers as independent contractors rather than employees. Last week’s injunction is part of an ongoing lawsuit brought in May by California Attorney General Xavier Becerra and a coalition of city attorneys.

San Francisco-based Judge Ethan P. Schulman ruled in favor of Becerra, and the city attorneys of San Diego, Los Angeles and San Francisco in their lawsuit alleging Uber and Lyft have misclassified their drivers, preventing them from receiving “the compensation and benefits they have earned through the dignity of their labor” such as the right to minimum wage, sick leave, unemployment insurance and workers’ compensation benefits.

“It’s a challenge and it’s a problem,” Porche said. “It takes away the flexibility to drive with more than one app. Right now I drive multiple apps: Lyft, Doordash, Grub Hub. With this, you’ll be restricted to one app and one location.”

Schulman stayed his Aug. 10 ruling for 10 days to allow the companies time to appeal.

The two companies have said they may suspend their operations in California as soon as this week while simultaneously pushing for a referendum in November to exempt them AB-5. But industry watchers say the shutdown may not have the same impact on residents now as it once did in earlier fights because of their steep drop in ridership from the pandemic.

Multiple industry watchers noted that Uber and Lyft may be in a weaker position this time. Uber’s ride-hailing revenue for the second quarter of this year declined 67% from the same period a year earlier. Lyft’s business similarly shrank during the second quarter ending in June, with its revenue falling 61% and ridership falling by nearly the same amount.

Faulconer and Liccardo’s joint statement called for a stay on the injunction, citing economic impacts to California’s gig workers, and a loss of transportation options and delivery services for critical resources like food and medical care for California residents.

“This sudden disappearance of jobs and transportation options will only deepen the economic pain felt in our communities during this historic pandemic and recession,” the statement read.

The mayors said a stay could allow state leaders and the companies time to craft “a resolution to this complex issue and avoid irreparable harm upon hundreds of thousands of residents whose lives and livelihoods daily depend on these services.”

Faulconer and Liccardo also proposed the creation of a portable benefit fund for independent contractors that the companies would be required to pay into.

“Being forced into a situation where shutting down service is the only viable option hurts everyone at a moment when we need to pull together to help more Californians make ends meet,” the mayors said. “We call on all parties to turn this political standoff into a foundation for productive conversation about new ways to preserve a valued service and fairly compensate independent workers. California can choose to continue to implement solutions that lead the innovation economy, or to be led by others. The livelihoods of nearly one million residents depends on California choosing to lead.”

Uber and Lyft are also working to combat AB5 by sponsoring Proposition 22, a ballot initiative that, if approved by voters in November, would allow rideshare drivers to work as independent contractors.

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