Uber and Lyft threaten to strand passengers in California

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Close-up of vertical sign with logos for ridesharing companies Uber and Lyft, with wheels of a car in the background, indicating a location where rideshare pickups are available in downtown Los Angeles, California, October 24, 2018. (Photo by Smith Collection/Gado/Getty Images)

SAN DIEGO (Border Report) — An appeals court has allowed ride-hailing giants Uber and Lyft to continue treating their drivers as independent contractors in California while an appeal works its way through the court, according to the Associated Press.

Uber and Lyft had threatened to shut down operations as of midnight in protest of a California law mandating that drivers be classified as employees and thus eligible for benefits.

Lyft’s management has reportedly told employees and customers that operations will cease unless a court issues a stay to California’s Assembly Bill 5, which has been contested in courts since it became law Jan. 1.

It created new mandates when hiring independent contractors, gig workers and freelancers requiring them to be recognized as employees earning minimum wage, overtime, workers’ compensation, unemployment and disability insurance.

According to Uber, it earns about 9 percent of its gross earnings for rides within the state of California, although figures are said to be much lower since the COVID-19 era began.

Both Uber and Lyft, based in the San Francisco area, have said they can’t cover insurance costs, sick leave, overtime and other expenses for hundreds of thousands of drivers. They’ve also argued they are technology and not transportation companies stating drivers are not the focal part of their enterprises.

California officials have said both Uber and Lyft don’t contribute to the state’s unemployment insurance fund harming others throughout the state.

In the meantime, the ride-hailing companies are contributing millions of dollars to support a measure on the California November ballot seeking an exemption from the law.

Regardless of any court decision it is not expected to affect Uber Eats, which delivers food

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