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Lyft may suspend service in California if court requires it to classify drivers as employees

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A Lyft logo is displayed on a vehicle driving through Times Square, March 19, 2019 in New York City. (Photo by Drew Angerer/Getty Images)

Drew Angerer

Lyft may suspend services in California if the state does not overturn a recent ruling requiring it to classify its drivers as full-time employees, Lyft co-founder and President John Zimmer said on the company’s second-quarter earnings call. 

Shares of Lyft were as high as 6% after hours, but went negative when Zimmer said Lyft might suspend service in the state.

Uber would also likely pause its service in California if the ruling is not overturned, CEO Dara Khosrowshahi said in an MSNBC interview Wednesday. Khosrowshahi said a suspension would likely last until November when voters would decide on the ballot measure. If all else fails, he said, Uber’s service would likely return with a focus on city centers rather than more dispersed areas in which ride-hailing companies have filled gaps in transportation in recent years.

On Monday, a California judge granted a preliminary injunction requiring Lyft and Uber to stop classifying their drivers as independent workers after a ten day period in which the companies said they would appeal the ruling. If upheld, the order will require Lyft and Uber to treat its drivers as employees and cover additional expenses like benefits and unemployment insurance.

California Attorney General Xavier Becerra sued the companies in May alongside three city attorneys, alleging they violated the state’s new law that aims to provide benefits to gig workers. Uber and Lyft have consistently opposed the law and are funding a ballot measure that would exempt them from it if passed.

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