Lyft and Uber threaten to stop operating in CA if forced to make drivers employees

Lyft’s “good guy” image keeps slipping. 

The ride-hailing app joined its rival Uber in an employee classification fight in California Wednesday. 

During Lyft’s second quarter earnings call, co-founder John Zimmer responded to a California judge’s ruling that orders the two companies to classify drivers as full-time employees. “It will force us to suspend operations in California,” Zimmer threatened, opening up the possibility that all Lyft cars could be taken off the streets as early as next week.

His comments echoed those of Uber CEO Dara Khosrowshahi, who told MSNBC earlier Wednesday that Uber would shut down in California until November if its independent drivers had to be treated as employees with full benefits.

The preliminary injunction to comply with California’s new AB 5 employee classification law goes into effect Aug. 20, but both companies can appeal the California Superior Court decision. Both have already indicated they will do so. 

But in the unlikely event that the companies have to switch to an employee model, are Lyft and Uber’s threats to bail just scare tactics? A strategy to bend drivers and users to their desired outcome? 

Both companies, along with other apps like DoorDash and Instacart, have backed state Proposition 22 on the November ballot. That measure would exempt gig-based apps from AB 5’s employee requirements and keep workers as independent contractors. Uber’s Khosrowshahi wrote an op-ed in the New York Times this week about a “third way” to hire gig workers with some benefits and keep their flexible schedules.

The driver group Gig Workers Rising called the potential California app suspensions “vile corporate tactics.”

The idea that Uber and Lyft would shut down their apps in such lucrative markets “is ridiculous, and just another empty threat in their attempt to avoid accountability,” a statement from the group representing gig workers and drivers noted.

The group is heading a campaign to block Prop. 22 in the fall.

It appears Uber and Lyft want to offer a drastic preview of what the pro-Prop. 22 consumer advocacy group Consumer Choice Center called “serious repercussions” if AB 5 is forced onto Uber and Lyft.

“Changing employment law to make certain business relationships illegal deprives millions of people of the opportunity of using these services, and has serious repercussions for those who rely on these services both as customers and as workers,” the Consumer Choice Center had said in a statement after Monday’s ruling. 

The group’s deputy director, Yaël Ossowski, responded to Wednesday’s threats to shut down the apps in an email after the Lyft call. “It’s unfortunate that millions of Californians will be deprived of more choice if that happens,” he wrote.

Until Californians vote on Prop. 22, Uber and Lyft are standing united to do whatever it takes to keep drivers classified as independent.