Uber and Lyft prepare to stop in California

Things are getting serious for Uber and Lyft in California: After a judge's decision, they could stop operations in their home state as early as next week. For Lyft, it's about every sixth trip.

San Francisco (AP) - The driving service brokers Uber and Lyft could suspend operations in California after a setback in the dispute over the status of drivers.

A judge earlier this week ordered drivers active on the platforms in the state to be considered employees rather than independent contractors under a 2019 law.

The ruling is initially suspended for ten days to give the companies time to appeal. If this is unsuccessful, Lyft will cease operations when the order comes into effect on August 21, said co-founder John Zimmer on Wednesday. At Lyft, California accounted for 16 percent of driving. The Uber competitor currently only offers its service in North America.

Uber boss Dara Khosrowshahi had previously announced that the service would be stopped - initially until November. Then, on the day of the US presidential election, voters should also decide on an exception for driver service agents from the law.

If the Californians reject the addition and lose their service in court, the drivers will be permanently employed, said Khosrowshahi. Uber will then be a service with fewer vehicles and higher prices, as it was in the beginning a good decade ago.

The proposal for an exception is supported by Uber, Lyft and food delivery company DoorDash. Lyft alone spent around $ 40 million on corresponding lobbying work, as the company announced when it presented its current quarterly figures.

Khosrowshahi was convinced that after the changes made, the Uber drivers met the legal criteria in California to be considered independent entrepreneurs. They could set the prices themselves, the passengers would pay them directly and they could also decide whether or not to accept a trip.

There has been a dispute for a long time about the status of the drivers on the platforms of the transport service providers. Uber and Lyft insist that most drivers didn't want to become permanent employees themselves. Lyft speaks of around 80 percent who think that way. Critics denounce that with the current business model, among other things, drivers do not have sufficient protection against illness.

The business of Lyft and Uber was massively affected by the corona crisis in the past quarter. At Lyft, sales fell 61 percent to $ 339.3 million, as the company announced after the US market closed on Wednesday. The loss was at the same time with $ 437.1 million significantly below the $ 644.2 million from the same quarter last year. Uber reported a 29 percent drop in sales to $ 2.2 billion last week - and a loss of $ 1.8 billion.

© dpa-infocom, dpa: 200813-99-148829 / 2

Khosrowshahi at MSNBC

Lyft on business last quarter