Lyft will shut down its operations in California on Thursday night in response to a state law that forces it to reclassify its drivers as employees.
“This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips,” Lyft wrote in a statement.
The ridesharing company will suspend the app at 11:59 p.m. PT due to a law, which requires companies like Lyft and Uber to count contracted drivers as regular employees under state law, providing them benefits. The shutdowns come as no surprise, since Lyft — as well as Uber — had threatened to shut down if their legal request blocking the law was not granted.
Uber has not revealed if it will shut down operations yet.
In its statement, Lyft said it has supported benefits like minimum earnings guarantees and health care subsidies while also advocating for “maintaining the flexibility and control that independent contractors enjoy.”
“This is something drivers have told us over and over again that they want,” Lyft said. “Instead, what Sacramento politicians are pushing is an employment model that 4 out of 5 drivers don’t support. This change would also necessitate an overhaul of the entire business model — it’s not a switch that can be flipped overnight.”
Uber and Lyft are both reportedly considering adopting a franchise business model that would license their brands to vehicle fleet operators. By adopting a model resembling an independently owned franchise, Uber and Lyft would not be in full control over their drivers.
Uber and Lyft can’t classify their drivers in California as contractors under a new gig economy law known as Assembly Bill 5 that went into effect earlier this year. Under the new law, contractors are eligible for basic protections like minimum-wage requirements, health benefits, and Social Security.
The companies are hoping to reverse the bill in November through a ballot initiative known as Proposition 22.
In its statement, Lyft pushed riders to support Proposition 22. “We believe voters should decide,” the company said.
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