Last-minute reprieve for Uber and Lyft: Court delays move to employee status

Lyft and Uber are appealing a court decision that says their workers are employees. Photo / AP

Uber and Lyft have won a last-minute reprieve that will allow them to continue operating as gig economy companies in California, after a court pushed back a deadline forcing them to reclassify drivers as full employees.

The ride-share companies had threatened to suspend their services across the entire state had the midnight Thursday deadline been kept in place. They argued switching drivers' status would be infeasible in the timeframe.

That scenario has now been pushed back until at least October while the companies' full appeal can be considered.

It represents a brief victory for the gig economy, but one that may merely delay big changes in how its workers in California are compensated and protected. The changes are likely to influence how the companies are treated in other parts of the US and around the world.

In its ruling, the court has ordered the companies to develop implementation plans for turning drivers into employees in case they lose their appeal, or if a new law they are backing fails to pass when voted on in November. Those plans have to be ready by September.

"We are glad that the Court of Appeal recognised the important questions raised in this case, and that access to these critical services won't be cut off while we continue to advocate for drivers' ability to work with the freedom they want," an Uber spokesman said.

A Lyft spokeswoman could not immediately be reached.

Uber's share price rose more than 6 per cent on the news, while Lyft's was up by the same amount, having reversed a mid-day dip after the company prematurely and incorrectly told drivers and riders the suspension was going ahead.

In the past few days, Uber and Lyft, headquartered in San Francisco, warned users to "plan ahead", using the opportunity to lobby for a new law, being voted on this coming November, which would keep drivers as contractors but put in place a limited number of benefits.

It would offer a "minimum earnings guarantee" and limited healthcare provisions based on the number of hours worked, but not, as existing employment law demands, paid leave, sick days or unemployment compensation.

Advocates of employment rights for gig workers had called the threat of shutdowns a political stunt in keeping with the companies' history of leaving markets while campaigning for changes in policy.

"What company operates outside of the law, knowing the law has changed, and has no contingency if they get caught?" said Lorena Gonzalez, California assemblywoman, who wrote Assembly Bill 5 (AB5), the law the state is using to sue the companies.

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