Appellate Court Grants Uber and Lyft Temporary Relief from Re-Classifying Drivers as Employees

Date   Aug 24, 2020

On August 13, 2020, we reported on the San Francisco Superior Court’s granting of a preliminary injunction ordering Uber and Lyft to re-classify their California drivers from independent contractors to employees and to comply with the California Labor Code, the Unemployment Insurance Code, and the Industrial Welfare Commission wage orders. The superior court stayed the injunction for 10 days to provide Uber and Lyft an opportunity to appeal. Due to this order, Lyft previously indicated that it would cease its California operations on August 20 at 11:59 p.m. local time instead of reclassifying its drivers as employees.

However, just when the 10-day stay was about to expire, on August 20, 2020, the First Appellate District of the California Court of Appeal granted Uber’s and Lyft’s petitions for writ of supersedeas, which now stays the trial court’s preliminary injunction until August 25, 2020.

The stay will remain in place pending Uber’s and Lyft’s appeal of the Superior Court’s order on the condition that they both agree, by August 25, 2020 at 5:00 p.m., to the following: (1) a consolidation of their appeals, (2) an expedited briefing schedule with oral arguments to be scheduled for October 13, 2020, and (3) both companies’ CEOs will submit sworn statements by September 4, 2020 confirming that they have developed plans to comply with the Superior Court order if the appellate court affirms the preliminary injunction and Proposition 22, the company-sponsored ballot initiative, is rejected by the California electorate.

It is currently unknown whether Uber and Lyft will consent to these conditions, as it would require them to quickly develop an implementation plan by September 4, 2020, thereby requiring a level of commitment to reclassifying drivers as employees. However, if they do not consent to these conditions they would likely be required to comply immediately with the preliminary injunction or cease operations as Lyft originally intended to do.

Ultimately, regardless of Uber’s and Lyft’s intentions and ability to operate in California in the short term, even if the companies successfully appeal the preliminary injunction, they are likely to face a long battle in superior court, where California Attorney General Xavier Becerra and the city attorneys of San Francisco, Los Angeles, and San Diego filed a lawsuit against Uber and Lyft on May 5, 2020, seeking to require them to reclassify their drivers as employees. See California v. Uber Technologies Inc. and Lyft Inc., San Francisco Superior Court Case No. CGC-20-584402, discussed in further detail here.

Therefore, Uber’s and Lyft’s ability to operate in California in the long-term is largely dependent on the success of Proposition 22, which, if approved by voters, will provide an exemption from AB 5 for ride-hailing companies. Specifically, the Proposition would permit the classification of drivers as independent contractors in exchange for increased worker protections such as guarantees in minimum earnings, expense reimbursements, healthcare subsidies and insurance coverage for on-the-job injuries. (The text of the ballot initiative is available here). The approval of this ballot measure would also largely preserve many of the attributes of Uber’s and Lyft’s business models that make them attractive to drivers in the first place, like the ability for drivers to work largely on their own schedules, while providing some of the benefits that AB 5 was intended to provide to workers by reclassifying them as employees.

Even if Proposition 22 provides some relief for ride-sharing businesses, it may not necessarily provide similar benefits to other companies that utilize independent contractors. Therefore, companies who utilize independent contractors in California should continue to evaluate the viability of that classification under the ABC test, particularly because any “relaxing” changes in the law, whether through a ballot initiative or other challenges presented by Uber, Lyft, and/or other gig economy entities are unlikely to be retroactive. Otherwise, such entities may risk being exposed to legal liability through government enforcement mechanisms and/or class and representative Private Attorneys General Act (“PAGA”) actions.

FordHarrison attorneys are available to assist you in complying with AB 5 and other California labor and employment laws. If you have any questions or need assistance, please contact the authors of this Alert Jack Schaedel, partner in our Los Angeles office at, and Jamin Xu, associate in our Los Angeles office at Of course, you may also contact the FordHarrison attorney with whom you usually work.