On Monday, a California court ordered Uber and Lyft to reclassify their drivers as employees instead of contractors.
What we know:
- San Francisco Superior Court Judge Ethan Schulman issued the ruling on Monday, giving the companies 10 days to make an appeal before the order takes effect. The ruling came in a lawsuit against Uber and Lyft led by California’s attorney general and the city attorneys for San Francisco, Los Angeles, and San Diego.
- In January, a new California law went into effect codifying stricter requirements for companies to classify workers as contractors in the gig economy. Known as AB-5, the law added legal pressure to companies like Uber and Lyft who have long argued that their workers are contractors. Labor advocates say this law forces Uber and Lyft to treat drivers better and provide them with greater benefits and rights but many companies in the gig economy see AB-5 as a threat.
- In response, Lyft spokesperson Julie Wood said, “drivers do not want to be employees, full stop”.
- Uber released a statement: “We plan to file an immediate emergency appeal on behalf of California drivers. The vast majority of drivers want to work independently . . . When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression.”
- Lyft and Uber have lobbied hard that drivers prefer to be contractors because less regulation allows them to act independently and potentially earn more. Despite this, the lawsuit against the companies accuses them of denying drivers basic protections like minimum wage, overtime, sick leave, and unemployment insurance. In addition to not receiving benefits, Uber and Lyft drivers have to cover their own expenses like gas and maintenance.
- Uber and Lyft, as well as several food delivery services, have financially backed a ballot initiative that would classify gig app workers as contractors but provide them with some benefits.
The ballot measure opposing AB-5, known as Proposition 22, will be on the California ballot for the November election.