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Uber, Lyft could shut down in California over AB5

Posted at 6:06 AM, Aug 20, 2020
and last updated 2020-08-20 09:06:30-04

SAN DIEGO (KGTV) - Ridesharing companies like Uber and Lyft could shut down in California as early as Friday due to a judge's ruling ordering the companies to classify their drivers as employees, not contractors.

Uber and Lyft have warned their users and drivers about the possible shutdown. Both companies have appealed the ruling.

The issue stems from Assembly Bill 5, a law that classifies contractors as employees, giving them the right to unionize, have access to minimum wage, overtime, paid sick leave and workers compensation benefits.

Some Uber and Lyft drivers are in favor of AB5, but many others say they would like to continue working as independent contractors because of the flexibility the job allows them.

On Wednesday, a spokesperson for Assemblywoman Lorena Gonzalez, the author of bill AB5, sent ABC 10News the following statement:

"No one is forcing Uber and Lyft to throw hundreds of thousands of workers out in the cold. This is a mean-spirited tactic to bully Californians into giving the companies a special exemption from paying minimum wage and unemployment insurance. App companies have had years to fix this, but refuse. Shame on these corporations who are sitting on billions of dollars in cash reserves but are leaving their drivers with nothing."

In a tweet, Mayor Kevin Faulconer posted a joint statement with the mayor of San Jose, calling for a solution so the companies don't have to shut down operations in California.