Uber, Lyft will keep driving in San Diego after all. But the labor fight isn’t over
The ride-hailing giants had threatened to shut down in California. A court granted more time to figure out a next move.
Uber and Lyft won a delay Thursday on a court order requiring them to make contracted drivers into employees by Friday, heading off their threat to shut down services in California by midnight.
The temporary reprieve, granted by a state appeals court is the latest in a contentious legal battle between the ride-sharing companies and the state, which alleges in a lawsuit that Uber and Lyft are “exploiting hundreds of thousands of California workers” by classifying drivers as independent contractors when they should be employees under a law passed last year.
The companies have resisted offering drivers worker protections and benefits such as a minimum wage and unemployment insurance, the suit alleges. And they’ve also deprived the state of payroll taxes on potentially hundreds of thousands of employees.
Now, the court has ordered Uber and Lyft to file written statements by August 25 agreeing to some expedited procedures for their appeal and a new timeline. An oral argument is scheduled for October 13.
In San Diego, drivers were stuck between relief and frustration at the last-minute twist.
While some were thankful to continue earning money during an already-depressed economy, others said they were disheartened to see the companies delay their compliance with the new state law, AB5. The law, which went into effect in January, established stricter rules for companies to treat workers as independent contractors rather than employees.
“They’ve had time to consider how they would change the business model to make us employees,” said Terri Beilke of Oceanside, a longtime driver of the two ride-hailing companies who’s now on unemployment insurance due to the pandemic. “They say they’re scrambling right now, but that’s just political tactics. Uber and Lyft have a long-standing habit of forcing whatever they want onto drivers and passengers.”
Lyft did not respond to the Union-Tribune’s request for comment. Uber contends that many drivers prefer to remain independent contractors.
“The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law,” said Uber spokesman Davis White in a statement.
Beilke, who now organizes on behalf of San Diego drivers through the labor group Rideshare Drivers United, said this has been Uber’s narrative since AB5 was proposed last year. But she says the main thing drivers don’t want to lose is the flexibility of their schedules — something that doesn’t need to be in jeopardy under AB5.
“There’s nothing in the labor laws, federally or locally, that says you have to put your workers on a schedule,” Beilke said.
While the ride-sharing companies work through the appeals process, both supporters and critics are keeping their eyes on ballot measure Proposition 22, which will come before voters in November. Depending on the court’s timeline, it’s possible that voters will get final crack at determining Uber and Lyft drivers’ employment status.
Uber and Lyft, along with delivery giants Instacart and DoorDash, are backing Prop. 22, which would create a third category of employment that would include minimum wage, some auto insurance and vehicle maintenance costs, and a health care stipend for workers. The companies have invested more than $110 million in a “Yes on 22" campaign.
Converting drivers to employees would add significant costs for Uber and Lyft. In 2019, Barclays analysts estimated that reclassifying workers could cost Uber and Lyft an additional $3,625 per driver in California. That’s enough to hike Uber’s annual costs by more than $500 million and Lyft’s by $290 million, analysts said at the time. Both companies lost hundreds of millions of dollars in the most recent quarter.
Uber said the court’s decision Thursday to delay action will support workers and the economy. “When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression,” said spokesman White.
San Diego Mayor Kevin Faulconer, a Republican, put out a joint statement earlier this week with San Jose Mayor Sam Liccardo, a Democrat, urging the court to delay enforcement of the law on Uber and Lyft. The mayors outlined the potential harm to residents and the economy should the companies temporarily shut down.
“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 mayors stated.
Carolyn Cox, a City Heights resident with a visual disability, said she was dreading a shutdown of Uber and Lyft. She uses the services to fill in the gaps left by public transit, especially when the weather is poor. The recent heatwave has her avoiding long outdoor waits for buses to arrive.
She relies on Lyft and Uber for grocery trips, medical appointments and social visits with her friends, the latter of which has become most critical during the isolation of the pandemic.
“There’s not a lot to do,” she said. “It’s good for my mental health to at least get out and run errands.”
Cox said she was filled with relief to learn of the court delay.
“I’m not even a religious person,” she said. “But I’ve been praying about this all day.”
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