Judge rejects Uber, Lyft bids to delay reclassification

On Thursday a California judge dismissed requests from Uber and Lyft asking for more time to appeal his decision which would force the companies to classify drivers in their largest market as employees.Yahoo Finance’s Alexis Keenan joins The Final Round to break down the details.

Video Transcript

AKIKO FUJITA: Alexis, let's talk about another legal case you have been following. This is Uber and Lyft. A superior court judge denying the company's attempt to delay that preliminary injunction from going into effect, essentially saying the companies have to classify their employees as full time by August 20. So what-- are there-- what other legal avenues are there for Lyft and Uber? Or at this point, you know, are they going to have to either classify or, as they have threatened, essentially halt the business in order to be in compliance?

ALEXIS KEENAN: Yeah, so they-- both companies have said that they will appeal. Now, they were given 10 days to appeal, and that deadline happens on August 20. They went into court, and they said, look, we need more time than that to get our appeal together-- probably should've had their ducks in a row to not run into that problem. But they, like you've said, have threatened to leave the state, or at least temporarily suspend service there.

Now, when they do file their appeal and it goes up to the appellate court, that judge might say, we're going to issue a stay. We're not going to make you classify your drivers as employees right now. They can also say, no, you do have to reclassify your employees as drivers right now. So if they do, of course, tons of expenses that come with that.

You have payroll taxes. You have benefits for these employees. You have paid leave. You have insurance, all kinds of-- and also, you have to pay the drivers for the use of their cars, potentially. All big expenses and the companies know that. And they don't sound like they have aligned that in their business model yet. That's one of the arguments that they made in court, trying to get this extra time saying, we have to restructure our entire business models in order to do this.

But they just released-- one of their economists from Uber just sent out an email and trying to explain why they would have to do this restructuring. They said, think about it. We offer so much flexibility to our drivers, and you can't do that anywhere else. And even a company like Starbucks that has a ton of flexibility and hours, they still can't have baristas showing up when they just feel like it. They can't say, I'm not going to make this next cappuccino. I'm just going to walk out right now. But they're saying that's what their drivers can do, and that's why they need to keep the model that they have.