Uber Technologies Inc. (NYSE: UBER) and Lyft Inc. (NASDAQ: LYFT) got a reprieve from the California Court of Appeals on Thursday that allows them to keep operating in the state.
Both firms had warned they may have to suspend operations in California. Their announcements this week came after a San Francisco superior court judge on Aug. 10 issued a preliminary injunction that would have prohibited them from classifying their drivers as independent contractors as of Thursday.
Uber and Lyft both appealed the preliminary injunction and an appeals court judge on Thursday put the enforcement on hold during the appeal process. However, the Court of Appeals also ordered CEOs of both companies to provide a plan by Sept. 4 for complying with the preliminary injunction in the event the Court of Appeals upholds it and Proposition 22 on the November ballot fails. Proposition 22 is asking California voters to allow the firms to continue classifying their drivers as independent contractors.
The preliminary injunction came in a lawsuit against the companies by California Attorney General Xavier Becerra. The trial court judge ruled it appeared likely Becerra would prevail given California’s AB 5 law, which makes it more difficult to classify some workers as independent contractors.