Uber and Lyft Nearly Shut Down Service in California Last Week

August 24, 2020

In 2018, California’s Supreme Court ruled against a delivery company that classified its employees as independent contractors. This landmark decision was followed two years later by official legislation that required businesses throughout the state to turn contracted staff into full-time workers or else face legal action. The most prominent targets of this new law were Uber and Lyft, the rideshare giants that employ tens of thousands of people as independent contractors. 

According to consumer advocates, drivers for Uber and Lyft often work full-time schedules but receive no benefits due to the companies’ employment policies. Although California passed its law requiring businesses to classify such workers as employees in January 2020, neither Uber nor Lyft had made any strides towards complying with the law. Then a few weeks ago, a court issued an injunction requiring the rideshare startups to classify their staff as employees by August 21. In response, Uber and Lyft threatened to shut down services entirely but changed course at the last minute when another court granted a reprieve from the injunction. 

The two companies will now have until October 23 to make their appeal. Uber and Lyft have also sponsored a ballot proposition to reclassify their workers as contractors, an issue that California voters will decide on in November. If the rideshare industry loses their appeal and voters reject their initiative, Uber and Lyft will either be forced to follow the new laws or else cease operations in the state. Ultimately, whatever happens in California will likely have consequences that will be felt throughout the country.


  1. Why did Uber and Lyft almost cease operations in California last week?
  2. Do you think that Uber and Lyft should be required to classify their contracted workers as full-time employees? Why or why not?

Source: Carolyn Said, “The Future of Uber and Lyft in California: What You Need to Know,” San Francisco Chronicle, August 22, 2020.