Ride-hailing services from Lyft Inc. and Uber Technologies Inc. are continuing in California thanks to a last-minute ruling today by an appeals court.

Lyft Inc. earlier today said that it would suspend its app’s ride-hailing function in California at 11:59 p.m. PDT, following a previous court ruling ordering it to reclassify drivers as employees. Uber had also signaled that it would pause ride-hailing operations in California as well because of the order but stated after the appeal court’s decision today that it won’t freeze its service for now.

Today’s appeals court reprieve extends the companies’ deadline to comply with the order until Aug. 25, by which time the companies are required to agree to a new timeline and procedure or the stay will expire. The original order that prompted the companies to raise the possibility of suspending their services called on them to reclassify drivers as employees. The court published the decision on Aug. 10 and gave them 10 days, that is until today, to implement the change.

The appeals court will hear oral arguments starting Oct. 13. That makes it likely that the new status quo could hold at least until the Nov. 3 election, when voters will be able to decide on a ballot proposition backed by Uber, Lyft and others that would allow drivers to continue to be classified as independent contractors.

Uber shares rose almost 7% today, and Lyft shares likewise rose almost 6% on the latest news.

If it had gone through with a shutdown, which still could happen down the road, Lyft would no longer have provided rides but its app would have continued to be available in California and offer access to other services. These include the company’s car rental service as well as its bike- and scooter-sharing networks. The ‘Transit” feature it provides in some cities to help users find public transportation would have remained available, too. 

“At 11:59PM PT today our rideshare operations in California will be suspended. This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips,” Lyft said in a statement earlier today. If it’s made to reclassify drivers, the company added, 80% of its drivers would lose work and fare prices would increase.

Lyft and Uber currently classify their drivers as independent contractors. At the start of 2020, a law called AB5 went into effect in California that requires the companies to classify drivers as employees and provide them with employee benefits such as access to health insurance. Lyft and Uber have opposed making the change, which is why the former company is pausing its ride-sharing operation and the latter earlier said it would do so as well.

The companies will ask California voters to exempt them from AB5 through a ballot measure called Proposition 22 they’re sponsoring. The ballot measure would allow Lyft and Uber to continue classifying drivers as independent contractors, but also give drivers access to additional benefits including a minimum earnings guarantee and a healthcare subsidiary. 

Photo: Unsplash