Lyft and Uber will not suspend their ride-hailing services in California on Thursday at midnight, after a state appeals court ruled in their favor regarding an injunction against the companies. The move follows a court order in California that requires the companies to reclassify drivers as employees.

Earlier in the day, Lyft said it was prepared to shut down in the state, likely its largest market.

“As a result of a court order, we’ll be suspending rideshare throughout California at 11:59 PM PT on Thursday, August 20,” the company said in an update on its website. “We did everything we could to prevent this from happening and keep Lyft available for you, but it wasn’t possible to overhaul our business model and operations in ten days.” Judge Ethan Schulman of the San Francisco Superior Court ruled on Aug. 10 that the ride-hailing companies must start classifying their drivers as employees in the state. The judge said the injunction against the companies wouldn’t be enforced for 10 days to give them a chance to appeal — something both companies said they did. The injunction stems from a lawsuit against Uber and Lyft filed by the state of California in May. The suit says the companies “exploited hundreds of thousands of California workers” by classifying drivers as independent contractors and are violating California’s AB5 law on worker classification, which took effect in January. Uber and Lyft classify their drivers as independent contractors, which means the workers pay their own expenses, such as gas, car maintenance and insurance. Drivers also don’t have labor benefits like minimum wage, health insurance or paid sick leave. If they were to be classified as employees, many of those costs would then fall on the companies. Hundreds of drivers in the state have been rallying to be classified as employees by the companies. On Thursday, several drivers groups planned a protest in front of Uber’s headquarters in downtown San Francisco demanding the companies abide by AB5. Both Lyft and Uber said last week that if California forces them to classify their drivers as employees, they’d suspend operations in the state. The decision then went to the appeals court, which had the option of extending the 10-day pause on the injunction against the companies. Now that the court has granted that extension, Uber and Lyft will continue operations as usual in the state as the court examines their appeals. Oral arguments in the case are scheduled for Oct. 13. “While we won’t have to suspend operations tonight, we do need to continue fighting for independence plus benefits for drivers,” said Lyft spokeswoman Julie Wood. In a blog post on Thursday, Lyft also urged people in California to support a ballot measure that the companies are backing called Proposition 22 that aims to keep drivers as independent contractors. In all, Uber and Lyft — along with Doordash, Postmates and Instacart — have put $110 million behind the measure. The proposition is up for vote in California in November. *by Dara Kerr Carrie Mihalcik via CNET*

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