An appeals court on Thursday granted Uber and Lyft's requests to delay an injunction requiring the ride-hailing giants to classify their drivers as employees while the case is being considered.
The decision to grant the emergency stay comes the same day that both companies were set to be required to comply with Assembly Bill 5, a landmark law that establishes a test for determining whether workers can be classified as independent contractors rather than employees.
As full employees, drivers would get basic worker protections like a minimum wage and the right to organize.
Lyft announced before the appeals court decision that it would be suspending service in California at midnight. It reversed its decision to suspend operations shortly after the stay was granted.
“While we won’t have to suspend operations tonight, we do need to continue fighting for independence plus benefits for drivers," a spokesperson for the company told The Hill.
Uber's CEO Dara Khosrowshahi had also threatened to suspend ride-hailing operations in the state, but no official announcement has been made.
A spokesperson for the company confirmed that service will no longer be cut off after the decision.
“We are glad that the Court of Appeals recognized the important questions raised in this case, and that access to these critical services won’t be cut off while we continue to advocate for drivers’ ability to work with the freedom they want," they told The Hill.
San Francisco Superior Court Judge Ethan Schulman had ruled last week that Uber and Lyft must classify their drivers as full employees under the new bill, giving the companies 10 days to file an appeal.
That injunction will now be put on hold until the case is resolved in the appellate court, granted both companies agree to the conditions of the case.
If they do not, the injunction will take effect Aug. 25.
Both companies are being asked to file a brief by Sept. 4. On that date, both companies are also being asked to submit a sworn statement from their chief executives with an implementation plan to comply with Assembly Bill 5 if the court ultimately sides with Attorney General Xavier BecerraXavier BecerraThe Hill's Morning Report - Biden to make voting rights play in Atlanta Democrats eager to fill power vacuum after Pelosi exit Overnight Health Care — Insurance will soon cover COVID-19 tests MORE, who brought the initial case, and Proposition 22 fails to pass.
Proposition 22, which gig worker companies have poured millions into supporting, would exempt such companies from the bill.
Although the proposition would give some additional benefits to gig workers, the November ballot measure has faced strong pushback from drivers.