Futures

Lyft Considers Halting Operations In California

According to the president of Lyft (LYFT), John Zimmer, it may be looking at halting its operations in the state of California. Following the announcement of the possible suspension of service, Lyft shares were noted as dropping.

The announcement to potentially suspend California services by Lyft is in response to a new ruling in the state that would reclassify drivers for the rideshare company as full-time employees instead of independent contractors. On Monday of last week, a judge in the state of California issued a preliminary injunction on the reclassification. In the order (if upheld), a requirement was put in place for both Uber (UBER) and Lyft to begin changing the classification of drivers following an initial ten-day period. Benefits such as unemployment insurance and more would be required to be provided through this new ruling; however, Uber and Lyft have announced plans to appeal the decision.

In November, Proposition 22 will be voted on in California. Prop 22 essentially will allow Californians to vote on whether rideshare and delivery drivers should be classified as independent contractors and have policies developed that apply specifically to these types of jobs, or if a California Assembly Bill 5 should make the determination between drivers being employees or independent contractors.

Uber also has announced a possibility of suspension in California related to the new labor law change proposals. At the end of market day on Friday, Lyft was down 1.28% to $28.51, and Uber was down 1.54% to $29.99.


Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Trader Buzz). I have no business relationship with any company whose stock is mentioned in this article.

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