Judge rejects Uber, Lyft bids to delay California driver injunction

A California judge on Thursday refused to give Uber Technologies Inc and Lyft Inc more time to appeal his decision forcing them to classify drivers in that state as employees, which they have said would necessitate restructuring their businesses.

At a hearing in San Francisco Superior Court, Judge Ethan Schulman said he found no reason to extend his August 20 deadline for the ride-hailing companies to appeal the preliminary injunction he issued on Monday before it could take effect.

"I am unconvinced that any extension of the 10-day stay is required," Schulman said. "Both applications are denied."

Uber and Lyft have said they will appeal.

In late afternoon trading, Uber shares were down 0.8% while Lyft fell 4.9%. Lyft had reported quarterly results after U.S. markets closed on Wednesday.

The injunction came in a lawsuit where California and the cities of Los Angeles, San Diego and San Francisco accused Uber and Lyft of violating Assembly Bill 5, a new state law making it harder to treat "gig" workers as independent contractors.

Uber and Lyft prefer using that classification for drivers, because treating them as employees would require benefits such as minimum wage, paid sick and family leave, unemployment insurance and workers' compensation insurance.

The hearing came one day after the companies threatened to temporarily stop serving California, arguing that treating drivers as employees would undermine their business models.

Neither company is profitable, and both have suffered steep ridership declines during the coronavirus pandemic. They have also said drivers prefer remaining independent.

Uber, Lyft, DoorDash, Instacart and Postmates are spending more than $110 million to support Proposition 22, a November ballot measure in California to keep drivers as contractors, but with some benefits.

In ordering an injunction, Schulman assailed what he called Uber's and Lyft's "prolonged and brazen refusal" to comply with state law.