Lyft’s (LYFT) - Get Report rideshare operations were close to being suspended in California Thursday, according to a blog post posted by the company. Lyft’s services were going to case in the state at 11:59 Pacific Time.
However, a California appeals court granted Uber (UBER) - Get Report and Lyft temporary relief by giving them more time to reclassify their drivers as employees. Lyft and Uber’s drivers are currently independent contractors.
“This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips. We’re personally reaching out to riders and drivers to share more about why this is happening, what you can do about it, and to provide some transportation alternatives,” Lyft wrote in a statement Thursday.
According to Lyft, four out of five of its drivers don’t support the proposed employment model.
“We are going to keep up the fight for a benefits model that works for all drivers and our riders. 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,” said Lyft.
Lyft’s stock was down more than 8% midday, but jumped up 8% following the news of the appeals court extension.
So, what would Lyft pausing rides mean for Uber and Lyft? Jim Cramer shares his thoughts.