A driver displays Uber and Lyft ride sharing signs in his car windscreen. Picture: REUTERS
A driver displays Uber and Lyft ride sharing signs in his car windscreen. Picture: REUTERS

San Francisco — Lyft  said it will suspend ride-sharing operations in California as of midnight, making good on its promise to stop doing business in the state rather than comply with a law to reclassify its drivers as employees.

“This is not something we wanted to do, as we know millions of Californians depend on Lyft for daily, essential trips,” the company wrote in a blog post on Thursday. “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 shares dropped as much as 8.5% to $25.74 in New York trading.

Uber Technologies  has also threatened to leave the state in advance of the new law that would upend its business model, which relies heavily on independent contractors. The companies, both based in San Francisco, have argued that their current model allows drivers more flexibility. Labour organisers say they should be obligated to pay regular worker protections and benefits.

A spokesman for Uber had no immediate comment on Lyft’s announcement.

In its blog post, Lyft promoted California proposition 22, which would take the issue directly to voters, allowing the companies to continue to classify workers as contractors if passed. “A ballot measure this November, prop 22, proposes the necessary changes to give drivers benefits and flexibility, while maintaining the rideshare model,” Lyft wrote.

Gig-economy companies including Lyft, Uber and Instacart wrote and financed the November ballot measure, and have contributed heavily to the effort.

Bloomberg 

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