Orange County’s Outsourcing of Public Transit to Lyft Nearly Left Residents Stranded

JULIE LEOPO, Voice of OC

Lyft last week threatened the total suspension of its operations in California amid a legal battle with the state over a new law that reclassifies the company’s drivers as employees, rather than “gig” contractors. 

What seemed to be a solution among Orange County transportation officials four years ago — to slash underutilized public bus service in San Clemente and replace it with private rideshare app services like Lyft — nearly left some people stranded last week.

In 2016, the Orange County Transportation Authority (OCTA) tried to balance the elimination of two bus routes with low ridership in the city while still ensuring that the residents depending on them had other mobility options. 

The idea that year — posed by San Clemente officials in response to the cutbacks — was to subsidize Lyft for its services around town so residents who relied on the dropped bus routes could instead hail a driver through an app on their phone.

The OCTA-funded program has provided some source of mobility for the city’s transit-dependent residents ever since.

Then it almost fell apart.

On Aug. 20, Lyft threatened the total suspension of its operations in California amid a legal battle with the state over a new law that reclassifies the company’s drivers as employees, rather than “gig” contractors. 

Becoming employees would entitle drivers under Lyft and Uber (another rideshare app) to things like sick pay and overtime but raise costs on the companies’ end.

“There was a chance that the city was going to have to temporarily shut down the program if Lyft suspended its services in California later today,” said Jonathan Knetchel, a management analyst at San Clemente’s Public Works Department, on Aug. 20 in an emailed response to Voice of OC questions. 

Even during a coronavirus public health crisis, Knetchel said the Lyft program saw 2,500 rides per month. Pre-pandemic, ridership was about 6,000 a month.

For public transportation advocates like Santa Ana Active Streets Coalition member Peter Garcia, it was just one consequence of transit agencies outsourcing their services.

“An issue with transit agencies substituting traditional fixed route bus service with Lyft and Uber is, we don’t know how long these companies are going to keep going,” Garcia said, adding the shakiness of private sector operations would affect not only the transit agencies depending on them, “but also the passengers depending on them.”

The shutdown was averted Aug. 20 when Lyft won a stay on a court injunction in the face of state prosecutors’ lawsuit against the company alleging it’s now in violation of AB 5, the new employee reclassification law, which took effect in January. 

JULIE LEOPO, Voice of OC

OCTA bus on March 28, 2020.

Because Lyft averted the shutdown, Knetchel said the program “will continue to operate as usual.”

For now.

The lawsuit is still pending, and Lyft is currently pushing a state ballot measure appearing before voters this November that, if approved, would keep its drivers classified as contractors.

A spokesperson for Lyft in a written response to Voice of OC questions said the company has partnered with public agencies since 2014 for mobility programs across the U.S.

“These partnerships—with agencies like Metrolink, OCTA, and the City of San Clemente—are closing first/last-mile gaps, improving late-night mobility for second and third-shift workers, and lifting up communities that have historically faced significant barriers to access,” the spokesperson said. “By partnering with Lyft, these public agencies are able to provide the benefits of microtransit along with the convenience of on-demand transportation, with reduced overall administrative effort and costs.”

Though OCTA currently has its own rideshare pilot programs in play. Garcia said the close-call is an opportunity for OCTA to expand on them.

OC Flex, the transportation agency’s program, mimics rideshare services but is in-house.

It’s been in place for about a year, where residents can book a ride and pay per trip. 

Still in its pilot phase, the program has been servicing areas of Laguna Niguel, Aliso Viejo and Mission Viejo in south county, as well Huntington Beach and Westminster in central county though the pandemic temporarily shut that area’s services down.

Meanwhile, the Lyft drama came amid media reports of rideshare companies facing a years-long struggle to become profitable, burning cash and disappointing investors. Though Lyft argues it will become profitable by 2021, according to Reuters.

Garcia pointed out that OCTA despite its ridership declines will still have millions in public money behind it. 

“Transit agencies are hurting, losing ridership, and now are losing funds provided by sales tax, but we’re not going to see agencies like OCTA fold,” he said, adding “you can’t really depend on a company that threatens to leave the minute legislation they don’t like shows up” while calling OCTA’s microtransit programs “a niche these agencies shouldn’t be afraid to take on.”

Responding to questions over the company’s finances and whether these types of relationships between public agencies and private rideshare companies are sustainable, the Lyft spokesperson said “people will rely on transportation networks like Lyft more than ever” after the coronavirus pandemic:

“As the only pure-play transportation network company in North America — with rideshare, bikes, scooters, transit and car rentals integrated within one single platform — we believe we are well-positioned to be the long-term platform of choice for drivers, riders and partners.”

OCTA spokesman Eric Carpenter called the agency’s own rideshare program “another example” of the agency “continually refining its public transit services,” but said “what may work for one city may not be the best solution for another.” 

“We will continue to work with San Clemente and each city in Orange County to develop the best transit options,” he added.

Brandon Pho is a Voice of OC staff writer and corps member at Report for America, a GroundTruth initiative. Contact him at bpho@voiceofoc.org or on Twitter @photherecord.