By Tyler Durden
Lyft has decided to suspend its ridesharing operations in California beginning tonight at 11:59 pm PT.
“We don’t want to suspend operations,” Lyft wrote in a blog post.
“We are going to keep up the fight for a benefits model that works for all drivers and our riders.”
This decision follows a judge’s ruling forcing both Uber and Lyft to reclassify their drivers as employees beginning Friday. In response, both Uber and Lyft previously said they would be forced to temporarily pause operations in California.
Full blog post below:
At 11:59PM PT today our rideshare operations in California will be suspended. This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips. We’re personally reaching out to riders and drivers to share more about why this is happening, what you can do about it, and to provide some transportation alternatives.
Why this is happening
For multiple years, we’ve been advocating for a path to offer benefits to drivers who use the Lyft platform — including a minimum earnings guarantee and a healthcare subsidy — while maintaining the flexibility and control that independent contractors enjoy. This is something drivers have told us over and over again that they want.
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.
In this new model that politicians are pushing:
- Passengers would experience reduced service, especially in suburban and rural areas
- 80% of drivers would lose work and the rest would have scheduled shifts, and capped hourly earnings.
- Lower-income riders trying to make it to essential jobs and medical appointments would be faced with unaffordable prices (38% of Lyft rides in California begin or end in low-income areas that have few transit options already).
What we’re doing
We don’t want to suspend operations. We are going to keep up the fight for a benefits model that works for all drivers and our riders. We’ve spent hundreds of hours meeting with policymakers and labor leaders to craft an alternative proposal for drivers that includes a minimum earnings guarantee, mileage reimbursement, a health care subsidy, and occupational accident insurance, without the negative consequences.
What you can do
Your voice can help. A ballot measure this November, Prop 22, proposes the necessary changes to give drivers benefits and flexibility, while maintaining the rideshare model that helps you get where you need to go. We believe voters should decide. Please sign up to help today.
This sent LYFT shares tumbling….
And Uber is likely right behind since CEO Dara Khosrowshahi said yesterday on a podcast that the company can’t simply hire all 50,000 of its drivers overnight.
“All of our model, everything that we have built is based on this platform that brings earners and brings people who want transportation or delivery together,” he said on a Vox Media podcast yesterday.
“You can’t flip that stuff overnight. It’ll take time, and we will figure out a way to be in California. We want to be in California. But if the court case comes in, then we’ll have to shut down, and we’ve got the best engineers in the world figuring out how we can rebuild this thing. If we do have to go to employment model, what’s going to happen is that we will then have to underwrite driver productivity. There will be far fewer drivers employed, so my guess is 70-80% of users who use Uber for flexibility, they drove 5 to 10 hours, etc., they will not be able to earn. The prices are going to go up. They’re going to go up less in city centers. So I think SF prices will go up by 20%. Smaller cities prices will go way up.”
So how did that work out for you California legislators? Still, 50,000 people without their ability to earn (and prices rising, affecting the poorest most) is likely outweighed by your virtue-signaling, right?
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