San Francisco (AFP) - Uber rival Lyft said Thursday it will suspend its rideshare service in California rather than classify drivers as employees entitled to benefits under a new law.
The decision to sideline service by day's end came as Uber and Lyft awaited a decision by an appeals court that could keep them from having to comply with the new law by Friday.
"This is not something we wanted to do," Lyft said in a blog post.
A judge gave them until the end of Thursday to reclassify drivers as employees instead of independent contractors, which both companies argue is too complex and costly to do quickly.
"This change would also necessitate an overhaul of the entire business model - it's not a switch that can be flipped overnight," Lyft said.
Uber has said it will likely suspend ride service in California if an appeals court does not put a hold on the judge's order.
Uber and Lyft would likely keep ride-share service in California suspended until after voters in November determine the fate of a proposition they are sponsoring.
The proposition, which would become law if approved, would keep drivers classified as contractors but provide benefits such as health care.
"California is trying to do the right thing, but this is the wrong time for it," said technology analyst Rob Enderle of Enderle Group, referring to a job market crippled by the pandemic.
"This is not a time when you want to knock a whole lot of people out of work, which is the danger here."
A suit filed by California attorney general Xavier Becerra and three cities including San Francisco calls on the two rideshare companies to comply with a law that went into effect this year, requiring "gig workers" to be classified as employees, eligible for unemployment, medical and other benefits.
