Uber and Lyft narrowly avoided shutting down their California rideshare services late Thursday after an appeals court granted the companies a last-minute extension in their legal battle against the state over a new law that requires them to reclassify their gig economy drivers as employees.
The California appeals court has given Uber and Lyft until Tuesday to file written statements as part of their ongoing fight with state Attorney General Xavier Beccera (D), who sued the companies earlier this year for failing to comply with the new law, which is known as AB5.
Last week, a San Francisco judge ruled against Uber and Lyft in the case but gave the companies ten days to appeal the decision. When their appeal was rejected, the companies said they were preparing to shut down in California, potentially putting thousands of drivers out of work.
The extension means that Uber and Lyft will be able to continue operating in the state for at least another five days. The companies are hoping that California voters will pass Proposition 22, which would essentially reverse the new law and exempt gig drivers from being treated as employees. Voters will get to decide on the proposition on November 3.
“We are glad that the Court of Appeals recognized the important questions raised in this case, and that access to these critical services won’t be cut off while we continue to advocate for drivers’ ability to work with the freedom they want,” an Uber spokesperson said in a statement.
Both Uber and Lyft are spending large sums of money to fight AB5, which they claim would deprive their drivers of the flexibility to set their own work schedules. Uber has also claimed that the law doesn’t apply because Uber’s core business is providing a technology platform, not riding services.
AB5, which went into effect in January, is the product of far-left labor activists who have sought to give freelance workers access to benefits and perks. But the law has negatively impacted some freelance workers, including journalists. The left-wing Vox Media eliminated hundreds of freelance positions in December in anticipation of the new law.
Uber and Lyft’s fight against California comes as both companies continue to be hammered by the Chinese coronavirus, which has caused rideshare bookings to plummet as consumers and businesses cut back on their travel expenses.
Earlier this month, Uber reported that rideshare bookings dropped a dramatic 75 percent during the second quarter compared to a year ago.