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Uber and Lyft given extension in landmark case about driver labor

The situation was set to come to a head late Thursday night, with both companies warning that they would cease operations in California just before midnight.
Uber & Lyft Curbside Pickup Ban At Los Angeles International Airport Begins
Uber, Lyft and taxi drivers wait for fares at Los Angeles International Airport.Patrick T. Fallon / Bloomberg via Getty Images file

OAKLAND, Calif. — The California ride-hailing countdown is paused — for now.

An appellate court in San Francisco on Thursday extended a judge’s hold on a landmark lawsuit filed against Uber and Lyft concerning how the companies categorize their drivers.

The ruling extends a deadline that had been set for Uber and Lyft to change that categorization. The companies had said that if the deadline were not moved, they would cease operating in California.

Last week, San Francisco County Superior Court Judge Ethan Schulman found an "overwhelming likelihood" that Uber and Lyft had misclassified their drivers as independent contractors rather than employees.

That decision put the companies and the state on a collision course. Uber and Lyft have steadfastly defended that drivers should be contractors and that forcing them to treat drivers as employees will significantly hurt their businesses.

The situation was set to come to a head late Thursday night, with both companies warning that they would cease operations in the state just before midnight.

Thursday's ruling pushes back a decision by the 1st District Court of Appeal as to whether they will enforce the lower court ruling. For now, it appears that the companies’ threat to shut down their services across California will be halted.

Hours after the ruling, Lyft announced that it would not suspend service starting Friday.

“While we won’t have to suspend operations tonight, we do need to continue fighting for independence plus benefits for drivers," Lyft spokesperson Julie Wood said in an emailed statement. "That’s the solution on the ballot in November, and it’s the solution drivers want because it preserves their ability to earn and to use the platform as they do now — whenever they want — while also getting historic new benefits."

But the delay could be short. The ruling Thursday is pending an appeal of the decision by the companies on what is expected to be an accelerated schedule, with new filings due by 5 p.m. PT on Aug. 25, and a court hearing set for Oct. 13.

Both Uber and Lyft have made numerous public statements warning of a possible shutdown, saying that it was necessary to comply with the judge’s ruling.

Lyft had even prepared a video advertisement to run during Thursday evening’s Democratic National Convention, highlighting a driver who said that he valued being an “independent contractor” and that “some politicians want to shut us down.”

Neither AB5 nor Schulman’s ruling requires that the companies shut down.

John Coté, communications director for the Office of San Francisco City Attorney Dennis Herrera, said the pause would compel the companies to develop a plan to follow the law.

“The Court of Appeal is calling Uber and Lyft's bluff," he said in an emailed statement. "These companies may have bought themselves a little more time, but the price is that they have to demonstrate – under oath – that they have an implementation plan that complies with the law."