Earlier this week, Uber and Lyft were ordered by a Judge in California to classic drivers working for them as employees.
The judge has made a judgment ruling the classification of ride-hailing drivers as independent contractors, which Uber and Lyft say most drivers prefer because of the flexibility and ability of the drivers to set their own hours.
Although both companies has said they will be Appealing on the judgment which stayed for ten days, but if the appeal fails, Uber may close up business in California.
According to the CEO, Khosrowshahi, he said: “If the court doesn’t reconsider, then in California, it’s hard to believe we’ll be able to switch our model to full-time employment quickly,”
Also, in May, California Attorney General Xavier Becerra, along with city attorneys of Los Angeles, San Francisco, and San Diego, sued both parties, arguing that their drivers were not to be classified as independent contractors when they should be employees under the state’s AB5 law that went into effect immediately on January 1st.
They did not immediately respond to requests for comment. Uber also alluded to shutting down its business in California in the motion it filed in court on August 10th. In it, the company states:
“Because Uber will almost certainly need to shut down the Rides app while it builds these departments and systems, millions of drivers who use the app to earn vital income will likely lose that opportunity the day the injunction goes into effect—and that source of income will be lost for months, at least.”
However, If drivers were classified as employees, Uber and Lyft would be responsible for paying them minimum wage, overtime compensation, paid rest periods, and reimbursements for the cost of driving for the companies, including personal vehicle mileage. But as independent contractors, drivers receive none of these benefits.
You can check the appeal.