Uber, Lyft threaten to shut down in CA if court upholds ruling forcing them to treat drivers as employees

California

Lyft and Uber are confronting a recent judicial order that they classify their drivers as employees in California, which would leave the companies on the hook to provide benefits, overtime pay and sick leave for drivers. Both companies vowed to appeal the decision.

Uber CEO Dara Khosrowshahi on Wednesday told MSNBC that Uber would have to shut down in California if the ruling holds and the companies aren’t given a stay until November, when voters will decide on a related ballot measure.

On an earnings call later Wednesday, Lyft co-founder and President John Zimmer also said his company may suspend operations in California if the ruling isn’t overturned, CNBC reported.

Lyft on Wednesday posted a loss of $437.1 million for the second quarter, when the coronavirus outbreak meant few people were looking to use its ride-hailing service.

The San Francisco-based company’s revenue slumped to $339.3 million in the April-June quarter, down 61% from the same period last year.

Its number of active riders declined 60% during the quarter as people shied away from traveling in shared vehicles.

“Lyft’s second quarter results reflect an operating environment that was not only challenging for our core ridesharing business, but also for our valued riders and drivers and the communities we serve,” CEO Logan Green said in a statement with the earnings report.

Green, however, pointed to upbeat trends, noting that rides were up 78% in July compared to April.

Lyft took steps to stop the bleeding, and in April announced it would lay off 982 people, or 17% of its workforce. That month, rides were down 75% compared to the same time last year.

Lyft also launched a delivery service for government agencies, businesses and non-profit organizations to get essentials such as meals, groceries, hygiene products and medical supplies delivered by its drivers. More than 120,000 drivers had signed up by mid-April, but it’s unclear how much they were able to boost their earnings through deliveries after rides shriveled up.

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