Uber, Lyft drivers to resume working as independent contractors

An appeals court has allowed ride-hailing giants Uber and Lyft to continue treating their drivers as independent contractors while an appeal works its way through the court.

The stay pauses a lower-court ruling that was scheduled to take effect at midnight on Friday and would have forced Uber and Lyft to treat all their drivers as employees. The companies said that such a change in status would be impossible to accomplish overnight and would have saddled them with a financial burden difficult for them to shoulder while they are still struggling to turn a profit.

This comes hours after Lyft announced it would suspend rideshare operations in California beginning late Thursday night, in a blog post.

Uber and Lyft threatened to pull out of California by the end of the week if they were forced to classify their drivers as employees instead of independent contractors.

RELATED: Uber, Lyft threatening to pull out of California by week's end

When announcing the suspension, Lyft shared various alternative transportations options for the state's individual counties. 

In a statement, Lyft said the new model lawmakers in Sacramento are pushing would result in the following:  

• 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 rider trying to make it to essential jobs and medical appointments would be faced with affordable prices (38% of Lyft rides in California begin or end in low-income areas that have few transit options already).


In a statement, the company also said “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.”

Lyft wants California voters to determine what happens next when they go to the polls in November and make their choice on Prop 22.

The Associated Press contributed to this report.