Ride sharing as we know it could be coming to an abrupt halt in California.
The big two Uber and Lyft failed to get a California superior court judge to delay a preliminary injunction to classify drivers as employees.
Both companies are in violation of the state’s new AB5 law that became effective in January.
Lyft joined Uber in threatening to pull out of the Golden State over the ruling as they say they cannot afford to operate if drivers have legal recognition as official employees.
That would mean extra costs such as minimum salary, health insurance and workers’ compensation.
They argue most drivers are content with being an independent contractor as they prefer the flexibility of setting their own hours.
They both vowed to appeal the ruling which has been stayed for 10 days.
"If our efforts here are not successful it would force us to suspend operations in California," said Lyft President John Zimmer.
Uber CEO Dara Khosrowshahi earlier said it would pull out of California ‘for a while’ if it failed get the ruling overturned.
"If the court doesn’t reconsider, then in California, it’s hard to believe we’ll be able to switch our model to full-time employment quickly, so I think Uber will shut down for a while," Khosrowshahi said,
Written by Ray Montgomery, US editor
