San Francisco Superior Court Judge Ethan Schulman rejected requests by Uber Technologies Inc and Lyft Inc to delay enforcement of his preliminary injunction issued on Monday requiring the ride-hailing companies to classify drivers in that state as employees.
Both companies have indicated they will be forced to temporarily shutdown service beginning as soon as August 20th.
Uber CEO Dara Khosrowshahi said if the court doesn’t reconsider, “We will have to shut down until November.” The Court stated it would not reconsider.
Lyft co-found and president John Zimmer said that if a stay request was unsuccessful, “we would be forced to suspend our operations in California.”
The move marked the latest effort California prosecutors to force gig economy companies to provide benefits to their workers, including health insurance, paid time off and sick leave.
Prosecutors and labor advocates say companies including DoorDash, Uber and Lyft are violating a state law by classifying couriers and drivers as independent contractors – while those firms contend that their workers want the flexibility provided by that designation.
A DoorDash spokesman responded to Wednesday’s injunction request by saying that it was ill-timed and that the company’s internal data suggested the majority of its workers wanted to remain as contractors.
‘In the midst of one of the deepest economic recessions in our nation’s history, today’s action … threatens billions of dollars in earnings for California Dashers and revenue for restaurants that rely upon sales from delivery to keep their businesses open’, the spokesman told Reuters.
Uber’s Khosrowshahi warned that restructuring its operations in California would result in ‘much smaller service [and] much higher prices’, hurting both drivers and customers.
‘That’s a reality, so it’s not a game of chicken one way or another,’ he said. ‘It’s really up to the courts and we’re going to comply with the law, and we will look to get going again.’
He said that service would have to pause for a few months, and when it resumed it would be much more limited and concentrated in cities rather than suburbs.