One of the top ride-hailing apps in the country is suspending its service in California after a judge ruled it must classify drivers as employees instead of independent contractors.
Starting at 11:59 p.m. PDT on Thursday, Lyft will suspend service to riders in the West Coast state as it attempts to appeal a preliminary injunction that the company argues will severely stunt profitability.
“We don’t want to suspend operations,” Lyft stated in its announcement. “We are going to keep up the fight for a benefits model that works for all drivers and our riders. We’ve spent hundreds of hours meeting with policymakers and labor leaders to craft an alternative proposal for drivers that includes a minimum earnings guarantee, mileage reimbursement, a health care subsidy, and occupational accident insurance, without the negative consequences.”
California Attorney General Xavier Becerra requested the injunction in early August with local legislators in San Francisco and Los Angeles. The suit, filed in San Francisco Superior Court, alleged that Lyft and Uber were in violation of new state law AB5, which was crafted to ensure gig workers would be given benefit packages commensurate with other full-time employees.
Lyft’s stock tumbled almost 9% on news of the suspension of services, and competitor Uber is also expected to suspend services in California. The suspension in service will affect more than 300,000 drivers working for Lyft.
