Uber and Lyft’s California Operations in Limbo with Continuing AB5 Challenges

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Since AB5 came into effect in California the government has used multiple avenues to enforce the new law. This has put a target on Uber and Lyft in particular, as two of the biggest companies impacted by the law, and the ones that were also the main target of its passage to being with. However, the law has clearly had an impact on numerous other industries and companies, so it’s vital to see how the law is being used and how it impacts Uber and Lyft.

Most recently, a California court ordered Uber and Lyft to classify their drivers as employees rather than independent contracts. The companies initially responded by indicating they would pull out of California entirely. However, this has been put on pause after a Court of Appeal delayed the order.

While Uber and others continue to fight AB5, including through a ballot initiative in November, the way the law is being applied should be watched by all industries and companies, like those in trucking, who operate with independent contractors in large numbers. Even so, the ruling against Uber and Lyft, and their potential response of leaving the state, serves as a warning of the high stakes in this fight.  And, other companies need to prepare for similar choices. As such, it is essential for employers to determine how drastically their business would change if their independent contractors must be treated as employees, and how best to respond should they face this requirement as Uber and Lyft appear to be.

With questions around AB5 continuing, an experienced legal team can help navigate a potentially confusing and ever-evolving time for businesses, particularly with the ever-changing landscape for companies during the current pandemic.