The saga between the state of California and the two leading ridesharing platforms – Uber and Lyft – recently took a dramatic turn as the companies joint move to delay a court decision to reclassify its drivers as employees failed.
More specifically a California superior court judge denied their request to stop the order from going through on 20th August. As such, now Uber and Lyft are threatening to leave California as it becomes increasingly likely that reclassifying its drivers will be untenable for the companies.
Earlier this week, Uber CEO Dara Khosrowshahi warned that it would take the company several months to make the necessary changes to comply with the California court ruling, resulting in the service being potentially down in the state.
“Uber will almost certainly be forced to shut off the Rides platform in California if the injunction goes into effect, which would irreparably harm Uber and all who rely on its Rides app to generate income for them and their families — particularly in the midst of a pandemic,” the company’s legal representatives pointed out this week.
Uber and Lyft also note that their drivers prefer the flexibility that comes with being temporary workers, but as the gig economy during COVID-19 and lockdown has shown, these drivers are currently at risk under the new conditions.
With trade unions taking a different view on that flexibility, when next week’s 20th August ultimatum arrives, we should have a better idea of the route both Uber and Lyft wish to take.
While leaving California does not seem like a wise move, given Silicon Valley is there, not to mention it being the hub for tech globally, it will be interesting to see if other states in the US take a similar view of the ridesharing platforms’ classification of drivers.
This decision may also have implications for Uber in other parts of the globe, like South Africa, but it is still too early to tell at this stage.