California recently won a court order this week requiring Uber and rival Lyft Inc. to convert their drivers from contractors to permanent employees.
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Many California companies feel this as an existential threat to their business models and will affect their daily operations.
Uber and Lyft’s short-term objectives are to keep the newly enforced order from taking effect until Californians vote in November. A new measure would exempt app-based transportation and delivery companies from the law known as Assembly Bill 5. Postmates, Instacart, DoorDash, Uber, and Lyft have poured over $111 million to fight one of California’s most expensive legal battles ever.
Uber’s goal is to keep appealing court rulings as long as it can, in the hopes that will provide a reprieve, according to lawyers experienced with the case. The University of California at Berkeley law professor Catherine Fisk said Uber is basically playing the same game as lawyers who defend criminals. “The longer you fight, the longer your client gets to live,” she said.
Uber CEO Dara Khosrowshahi recently said it would be difficult to quickly change Uber’s labor model in California because they employ hundreds of thousands of drivers. Lyft President John Zimmer issued the same sentiments in an earnings call, saying “Lyft cannot comply with the injunction at the flip of the switch.”
Uber and Lyft asked the judge at a hearing on Aug. 13 to keep the ruling on hold for the duration of the court’s due process. The hold was denied, leaving the two companies with a deadline of August 20th to determine whats their next move. Uber and Lyft face an uphill battle in their California appellate request after a preliminary injunction was issued against them by a San Francisco judge.
Since a 2018 California Supreme Court ruling, California labor laws have made it more difficult for companies to lean on contractor models. Other states, such as Connecticut and New Jersey, have similar tests to determine who qualifies. Companies have used arbitration agreements as a standard for driver contracts to keep disputes from going to court.
Shannon Liss-Riordan, a Boston attorney, said that while the Aug. 10 ruling was a historic win, the credit goes to government action with a lawsuit brought about by the state attorney’s office. “Uber and Lyft have been leaders in this area,” Liss-Riordan said. “So many companies have been watching them and seeing what they get away with.”
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Sources: https://www.theverge.com/2020/8/13/21367906/uber-lyft-california-appeal-denied-driver-classify-employee
https://www.ttnews.com/articles/ubers-legal-strategy-driver-fight-delay-appeal-public
