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UPDATE: Lyft and Uber California shutdown averted for now

UPDATE: Lyft and rival ride-sharing service Uber look set to avoid a shutdown in California after an appeals court judge granted the firms a temporary reprieve in its ongoing legal battle with the state over employee classification.

Lyft had been set to shut down statewide at midnight rather than abide by an order to reclassify its drivers, from independent contractors to actual employees. Now, thanks to today’s ruling, Lyft and Uber will be able to operate as their appeal against the order is heard.

Original story in full below…

The ride-sharing firm Lyft – the major competitor to Uber in the United States – will suspend its operations in California amid an ongoing fight over how its drivers should be classified.

The start-up will cease all rides at midnight tonight in the most populous American state after it was ordered to reclassify drivers as employees rather than independent contractors. Rather than abide by the court ruling, which would have given more employment rights to those gig economy workers the company relies on, Lyft is simply choosing to cease operating.

The company says the Sacramento politicians are looking to force a model on drivers it claims 4 in 5 of them don’t want. It says the change would cause 80% to lose money and force the rest into scheduled shifts and capped hourly earnings.

The company says it prefers a different approach that gives drivers a minimum earnings guarantee as well as contributions towards healthcare.

In a blog post in Thursday, the company writes: “This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips… We don’t want to suspend operations. 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.”

Uber faces the same decision, but is yet to reveal whether it will cease to operate in the state moving forward. Right now it looks like the Silicon Valley economy that founded Uber and Lyft won’t have access to the service for a while.

A proposition on the ballot in the November elections in the state could ultimately decide the future of Uber and Lyft in California.

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