Lyft has said it will follow the footsteps of Uber in shutting down its operations in California if they are forced to classify drivers as employees. The company’s executives made the announcement on its standoff with the state and drivers union over in an earnings call with investors on 12th August 2020.
Both Uber and Lyft were earlier ordered by a California court judge to classify their drivers as employees. However, they can still appeal the ruling which they will do.
Lyft’s president John Zimmer in the earnings call said the company will have to shut down if the appeal fails.
“If our efforts here are not successful it would force us to suspend operations in California. Fortunately, California voters can make their voices heard by voting yes on Prop 22 in November,” he said.
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Uber, Lyft, and DoorDash are funding a ballot measure that would override the AB5 law. The ballot measure, called Proposition 22 will help the companies overcome the classification obstacle in the event their efforts to appeal the legislation fail.
Proposition 22 would override AB5 by classifying the drivers and other gig economy workers as independent contractors.
Lyft’s earnings report didn’t quite impress as the COVID-19 shutdown heavily impacted its business. The company earned $339 million in revenue in the second quarter of 2020.
The numbers show a 61 percent drop as compared to the second quarter of 2019. Lyft’s active ridership also fell to 8.7 million from 21.8 million active users in the second quarter of 2019, a 60 percent drop.
Lyft made fewer losses because it conducted fewer trips. Net losses for Lyft totaled $437.1 million during the second quarter of 2020, compared to $644.2 million for the same quarter in 2019.
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