A California appeals court on Thursday avoided a shutdown of ride-hailing services in the state by halting a lower court order that would have forced Uber Technologies and Lyft to treat their drivers as employees.
The companies had said they would be unable to comply with a new law that would consider their drivers employees entitled to benefits such as minimum wage, overtime and sick pay and unemployment insurance.
Lyft shares were up almost 9 per cent after the last-minute ruling, and Uber shares were up 6.4 per cent.
The threat to suspend service in the most populous US state marked an unprecedented escalation in a long-running fight between regulators, labour groups and gig economy companies that have upended traditional employment models around the world.
“We are glad that the Court of Appeals recognised the important questions raised in this case, and that access to these critical services won’t be cut off while we continue to advocate for drivers’ ability to work with the freedom they want,” Uber said in a statement.
Lyft did not immediately respond to a request for comment.
The companies had sought the intervention of the California first district court of appeal in San Francisco to block an injunction order issued by a judge last week. That ruling forced the companies to treat their drivers as employees starting Thursday after midnight. – Reuters