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Uber And Lyft Get Reprieve From California Court, No Shut Down

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Uber And Lyft Get Reprieve From California Court, No Shut Down

Lyft (NASDAQ: LYFT) shares traded lower on Thursday after the company announced it would suspend ridesharing operations in California at 11:59 p.m. Within hours of that news, a California appeals court granted an emergency stay to Uber and Lyft, which paused the ruling requiring the companies to reclassify their drivers as employees by Friday.

What Happened: The company claims it has received threats to shut down its operations in California this week over Assembly Bill 5 (AB5), a law that extends employee status to rideshare drivers.

California's Attorney General Xavier Becerra and the city attorneys for San Francisco, Los Angeles and San Diego have sued Lyft and Uber (NYSE: UBER), accusing the companies of violating Assembly Bill 5 by misclassifying their employees as independent contractors.

In a recent court filing, the companies decided to pull their services in California as they fight a new labor law.

See Also: Uber Vs. Lyft: Which Is In A Better Position To Weather COVID, California Storms?

“This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips," Lyft said in a Thursday blog post. "We’re personally reaching out to riders and drivers to share more about why this is happening, what you can do about it, and to provide some transportation alternatives.”

What’s The Impact: Some media reports say California represents about 16% of Lyft's rides. The company has set up a ballot measure this November, Prop 22, which proposes the changes to give drivers benefits and flexibility.

Price Action: After falling more than 6% earlier in the day, Lyft shares were trading up 6.29% at $29.91 on Thursday afternoon. The stock has a 52-week high of $54.69 and a 52-week low of $14.56.

Uber shares were trading up 6.63% at $31.37. The stock has a 52-week high of $41.86 and a 52-week low of $13.71.

 

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