Lyft will close its operations in California on Thursday night in response to a state law that forces it to reclassify its employees as employees.
“This is not something we want to do, as we know that millions of Californians depend on Lyft for daily, necessary trips,” Lyft wrote in a statement.
The ridesharing company will suspend PT at 11:59 pm due to a law that requires companies like Lyft and Uber to count contracted drivers as regular employees under state law, allowing them to benefit. The shutdown comes as no surprise, as Lyft – as well as Uber – threatened that they would shut down if their legal request blocking the law was not approved.
Uber has not revealed whether it will cease operations yet.
In its statement, Lyft said it supported benefits such as minimum earnings guarantees and health care subsidies, while advocating “control to maintain flexibility and enjoy independent contractors”.
“It’s something that drivers have repeatedly told us they want,” Lyft said. “Instead, what Sacramento politicians are pushing is an employment model in which 4 out of 5 drivers do not support. This change would also require an overhaul of the entire business model – this is not a switch that can be flipped overnight. “
Both Uber and Lyft are reportedly considering adopting a franchise business model that will license their brand to vehicle fleet operators. By adopting an independently owned franchise model, Uber and Lyft will no longer be in complete control of their drivers.
Uber and Lyft cannot classify their drivers in California as contractors under a new gig economy law known as Assembly Bill 5 that came into force earlier this year. Under the new law, contractors are eligible for basic safety requirements such as minimum safety requirements, health benefits and social security.
The companies are hoping to reverse the bill in November through a ballot known as Proposition 22.
In his statement, Lyft pushed riders to support Proposition 22. “We believe voters should decide,” the company said.