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Lyft says it could leave California if drivers become employees

Lyft CEO Logan Green said in a sworn statement that his company may cease operations “in all or some parts of California” if forced to reclassify drivers as employees.

Lyft CEO Logan Green said in a sworn statement that the ride-hailing company may cease operations “in all or some parts of California” if forced to reclassify drivers as employees.

Lyft, like rival Uber, last month floated the possibility of leaving the state for a period of time if a temporary injunction forcing reclassification remained in place.

Both won a reprieve from an appeals court, but the court required the two companies’ CEOs to submit sworn statements that they had plans to comply with the injunction within 30 days if their appeal ultimately fails and if Proposition 22, their ballot measure that would exempt them from employing drivers, does not pass in November.

“Lyft has developed, and will continue to develop, implementation plans” for this scenario, Green’s statement said, without giving any details other than possibly leaving California. Uber CEO Dara Khosrashahi also was required to submit a similar statement on Friday, but it was not immediately available.

Lyft also filed arguments Friday for its appeal of the injunction, reiterating points it had already made in the case, which was brought in May by the state of California and three cities.

State Attorney General Xavier Becerra charged that Lyft and Uber are violating AB5, California’s new gig-work law, and depriving drivers of the rights and benefits of employees. San Francisco Superior Court Judge Ethan Schulman last month granted Becerra’s request for a preliminary injunction to force immediate reclassification, but then stayed his order, giving the companies time to appeal, which they did.

Lyft’s legal briefing said the injunction “mandates that Lyft and Uber terminate their existing relationships with hundreds of thousands of drivers in California, transform the core of Lyft’s business, and end ridesharing in California as we know it.”

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The company argued that it would jeopardize earnings opportunities for drivers.

“Lyft would change from a marketplace service to a top-down organization,” it said, adding tht that would “likely entail instituting scheduled shifts, eliminating drivers’ choice to reject rides, and barring them from using other platforms during a shift for Lyft.”

Both Lyft and Uber contend that AB5 does not apply to them, and are pinning their hopes on Prop 22 for a permanent exemption from it. Late last week, they each contributed $17.5 million to the Yes on 22 campaign, on top of $30 million each had previously donated. Yes on 22 now has collected $181 million, while the No on 22 campaign, funded by organized labor, has $4.8 million.

William Gould, a Stanford emeritus professor of law and a former chair of the National Labor Relations Board who has been critical of both ride-hailing companies, questioned whether potentially leaving California showed Lyft was not complying with the appeals court’s stay of the preliminary injunction.

“I read the stay to be conditioned upon a plan to implement,” he said. “Going out of business is not implementation.”

Carolyn Said is a San Francisco Chronicle staff writer. Email: csaid@sfchronicle.com Twitter: @csaid

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