Lyft will shutdown operations in California tonight, citing its inability to comply with a judge’s order forcing it to immediately re-classify its drivers as employees. Uber is also threatening to suspend service. SEE UPDATE BELOW
Lyft California Shutdown
In a blog post, Lyft says that it will suspend operations in California tonight at 11:59PM PT.
It warns that the consequences of AB5, a law that forces companies like Uber and Lyft (among others) to re-classify independent contractors as employees, will be that 80% of its drivers will lose their jobs “and the rest would have scheduled shifts and capped hourly earnings.” It also alleges that workers do not support AB5:
“What Sacramento politicians are pushing is an employment model that 4 out of 5 drivers don’t support. This change would also necessitate an overhaul of the entire business model — it’s not a switch that can be flipped overnight.”
It offers three warnings if its drivers must ultimately be re-classified:
- Passengers will experience reduced service, especially in suburban and rural areas
- 80% of drivers will lose work and the rest would have scheduled shifts, and capped hourly earnings
- Lower-income riders trying to make it to essential jobs and medical appointments will be faced with unaffordable prices (38% of Lyft rides in California begin or end in low-income areas that have few transit options already)
It offers a carrot as well if workers remain independent contractors, promising:
- minimum earnings guarantee
- mileage reimbursement
- health care subsidy
- occupational accident insurance
Finally, it urges California citizens to vote for Prop 22 this November (a measure Live and Let’s Fly supports), which would maintain independent contractor classification for Uber and Lyft drivers…and in other industries as well, including blogging.
But Gig Workers Rising, an organization that supported AB5, held a protest at Los Angeles International Airport this morning demanding that Lyft and Uber pay their “fair share” to drivers and classify them as employees.
CONCLUSION
It looks like Lyft service will no longer be available in California starting tomorrow. While this represents a particular tough tactic, Lyft is hoping to appeal to more drivers and riders by the move. Uber, which is also warning about suspending service in California, may not be far behind.
UPDATE, 12:27PM PT:
BREAKING: Uber and Lyft injunction stayed, hours before companies planned to pull out of CA
— Jeremy B. White (@JeremyBWhite) August 20, 2020
> Read More: A Day Of Reckoning For Uber And Lyft In California
image: Lyft
This is why we need freedom and not laws. Laws can criminalize anything, while freedom means operating voluntarily and consensually with individuals and upholding the freedom of others. People who want economic freedom are incompatible with those who want big government bureaucracy and micromanagement of our lives. AB5 means higher prices to customers, less jobs for people who want to drive on their own schedule, and slower service. Uber/Lyft provided a lot of people with the opportunity to make extra money to support their families or even make decent money as a full time job. That option is now cut off to a lot of people. This is what government does.
Judge just gave them a stay on the order. Brinkmanship and state blinked.
Love it! This is what happens when a socialist government tries to mettle in a highly functional private industry. If there was an opposing force to “creative destruction” this would be it.
I still think there is case for middle ground – drivers should be guaranteed $15 per hour (a widely agreed-upon living wage) for each minute they are driving a passenger, and about 60 cents per mile for each mile they are driving a passenger (the IRS mileage reimbursement rate that covers fuel, insurance, maintenance, depreciation). If a driver earns more (as many do, especially when working busy routes), great.
Fundamentally, these workers do not deserve overtime because they choose when they work. As for sick days, if Uber/Lyft want to accrue some kind of system whereby they are provided the required 3 days of sick leave per year, so be it. Worker’s Comp and health insurance can be offered by Uber/Lyft but solely paid by the driver (with the option to opt out).
Does anyone see a problem with the above?
There’s no reason to provide $15/hour, even if that is a “living wage”. Most are doing this work for supplemental income, thus a living wage is irrelevant. Minimum wage should be the minimum drivers earn, and minimum wage should be set by states at a level below whatever the poverty level is for this reason (also to encourage young people to gain experience. Minimum wage jobs should not be lifelong careers).
If these services want to offer health insurance that’s fine, but Obamacare is always an option. No other employer is mandated to offer health insurance, why should Uber/Lyft?
Aside from that, yes, I agree that at a minimum they should be earning minimum wage plus mileage credit for time driving passengers(not for time just logged in).
Glad to see Beccera getting punked again. He is the absolute worst. Calling Uber and Lyft “evil” is his jumping the shark moment.
I never understood why the original law even passed. As an employee, I am expected to work a pre-determined number of hours in a specific location for a specific amount of dollars or percentage of commission.
The drivers are not beholden to any schedule, nor are they expected to work at all if they chose not to. That is the very essence of a “gig”. They choose to have the freedom more than the stability or income.
If the drivers want more, than they should work for a transportation company or other organization that is willing to classify them as employees yet give them the same work schedule freedoms… but the reality is no company will because it’s not realistic. It’s also ridiculous that they want to force a company to change their business model just so they can have things their way.
It passed because idiot California voters never met a freedom restriction or tax they didn’t love, and CA politicians still have never learned the law of unintended consequences
You’ve got some pent up grievances it seems… and a pretty broad brush to paint with.
What I wrote is accurate, so you can go psychoanalyze someone else.
It’s beyond hilarious that you remain so, so, so blissfully ignorant with your calling out “unintended consequences”
maybe lyft and uber should sell the drivers the app and let the drivers collect the money directly ?
California is a SH%THOLE
You mean the 5th largest economy in the world? Where everybody wants to live due to beaches, lifestyle, weather, culture, mountains, etc/
What sh!thole low-education state do you live in BTW?
Beautiful scenery and landscape but that’s it. The government is insufferable, the bureaucracy means only giants like Apple and Facebook can thrive (I’m all for big corporations that provide earnings for shareholders but government shouldn’t be implementing restrictions and excess regulations that make it difficult for smaller businesses to exist), illegal nw latinos commit a disproportionate amount of violence and make parts of cities and towns no go zones, the public and private universities brainwash kids, and the income and property taxes are some of the highest in the country.
If you have money, it is very easy to live there. You can live in private communities and stay away from the troublemakers. However, regular people aren’t able to raise their kids in an environment conducive to traditional family values, peace, and security.
“Traditional family values” – 1950 called, paging you
“Government is insufferable” – only for people stuck in the 1950s…maybe Mississippi is more to your liking
Good on the State for blinking. CA is run by moron politicians. In all the surveys, drivers of Lyft and Uber by a 4 X 1 margin prefer NOT to be W2 employees. That model would NEVER work for these companies. If it’s not broke don’t fix it.
I think it’s funny the state changed their mind. It would have been really funny to see Uber and Lyft stop services in many cities. That way politicians might have actually felt the wrath of voters.
I get that people here think these drivers are not employees because they control their hours and provide their own equipment, but what I have never understood is why the companies don’t want the drivers to be employees. If the drivers are not employees then the Lyft/Uber business model is straight forward price fixing under the Socony-Vacuum standard. As contractors, the drivers would have to submit independent bids with no contact between themselves nor any mechanism to see the other bids (i.e. no price signaling like the airlines do). If anything, the companies should be begging the taxi boards to regulate pricing so they are covered by a regulatory antitrust exemption, but every time a taxi board tries to say Lyft or Uber is covered they act like it’s going to put them out of business.
True story, one of my clients was a strip club. I made them change the sign from lap dances $25 to lap dances $20-$30 to help get around having the dancers classified as employees. As contractors, they are free to charge whatever they want within the boundaries of club policy. If they collude to set fixed prices, that’s on them not the club.
I also knew that CA would stay the order. They are all talk and ultimately they wouldn’t take the risk. It looks like many people knew it never would have happened. Uber stock was trading up much of today.