January 23, 2021

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Lyft president says it may have to suspend service in California

Lyft President John Zimmer (L) and CEO Logan Green during an interview at an IPO event in Los Angeles March 29, 2019.

Michael Luciano | CNBC

Lyft may suspend services in California if the state does not overturn a recent ruling requiring it to classify its drivers as full-time employees, Lyft co-founder and President John Zimmer said on the company’s second-quarter earnings call. 

Shares of Lyft were as high as 6% after hours, but went negative when Zimmer said Lyft might suspend service in the state.

Uber would also likely pause its service in California if the ruling is not overturned, CEO Dara Khosrowshahi said in an MSNBC interview Wednesday. Khosrowshahi said a suspension would likely last until November when voters would decide on the ballot measure.

If all else fails, Khosrowshahi said, Uber’s service would likely return with a focus on city centers rather than more dispersed areas in which ride-hailing companies have filled gaps in transportation in recent years.

On Monday, a California judge granted a preliminary injunction requiring Lyft and Uber to stop classifying their drivers as independent workers after a ten day period in which the companies said they would appeal the ruling. If upheld, the order will require Lyft and Uber to treat its drivers as employees and cover additional expenses like benefits and unemployment insurance.

California Attorney General Xavier Becerra sued the companies in May alongside three city attorneys, alleging they violated the state’s new law that aims to provide benefits to gig workers. Uber and Lyft have consistently opposed the law and are funding a ballot measure that would exempt them from it if passed.

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