US court rules that Uber and Lyft workers are contractors
- By Annabelle Liang
- Business reporter
A US court has ruled that “gig” economy giants including Uber and Lyft can continue to treat their workers as independent contractors in the state of California.
Labor groups and some workers had opposed the measure, saying it stripped them of rights such as sick leave.
The firms say the proposal protects other benefits such as flexibility.
The latest ruling overturns a decision made by a lower California court in 2021, which found that Proposition 22 affected lawmakers’ authority to set workplace standards.
The state of California and a group representing Uber, Lyft and other companies appealed the decision.
On Monday, a three-judge panel at the Court of Appeals ruled that workers can be treated as independent contractors. However, it removed a clause, which placed restrictions on collective bargaining between workers, from Proposition 22.
Shares of Uber and Lyft were nearly 5% higher in after-hours trading.
“Today’s ruling is a victory for app-based workers and the millions of Californians who voted for Prop 22,” said Tony West, Uber’s chief legal officer.
“We are pleased that the court respected the will of the people and that Prop 22 will remain in place, preserving the independence of drivers,” West added.
Lyft said the proposal “protects independence drivers’ value and provides them with new, historic benefits.”
The Service Employees International Union, which challenged the constitutionality of Proposition 22 with more drivers, said it is considering appealing the court’s decision.
In November 2020, California voters passed Proposition 22 which allowed freelance workers to be classified as independent contractors.
It was a victory for Uber and Lyft, which are running a $205m (£168.7m) campaign to support the measure.
Some drivers had supported Proposition 22, but other drivers and labor groups opposed it, pointing out all the benefits of being classified as employees, including sick days, vacation and overtime pay.
Tens of millions of people work in the global gig economy across services such as food delivery and transport.
Gig workers are paid for individual tasks, such as food delivery or car travel, rather than receiving a regular salary.
Most US federal and state labor laws, such as those requiring minimum wage or overtime pay, do not apply to gig workers.
Companies like Uber and Lyft have come under more scrutiny as the industry grows in size.
