SACRAMENTO, Calif. (AP) – App-based ride-hailing and delivery companies like Uber and Lyft can continue to treat their California drivers as independent contractors, a state appeals court ruled Monday, allowing the tech giants to bypass other state laws requiring worker protections. and benefits.
The ruling largely upholds a voter-approved law called Proposition 22 that makes drivers for companies like Uber and Lyft independent contractors and not entitled to benefits such as paid sick leave and unemployment insurance. A lower court ruled in 2021 that Proposition 22 was illegal, but Monday’s ruling overturned that ruling.
“Today’s decision is a victory for app-based workers and the millions of Californians who voted in favor of Prop 22,” said Tony West, Uber’s general counsel. “We are happy that the court respected the will of the people.”
The ruling is a defeat for unions and their allies, who in 2019 passed a law requiring companies like Uber and Lyft to treat their drivers as employees.
“Today, the Court of Appeals decided to side with the working people of powerful corporations, allowing companies to circumvent our state’s labor laws and undermine our state constitution,” said Lorena Gonzalez Fletcher, president of the California Federation of Labor and a former state assemblywoman. who authored the 2019 “Our system is broken. To say we are disappointed with this decision would be an understatement.”
The ruling wasn’t a complete defeat for unions, as the court ruled that companies can’t prevent their drivers from joining a union and collectively bargaining for better working conditions, said Mike Robinson, one of the drivers who filed a lawsuit challenging the Proposition. 22.
“Our right to join together and bargain collectively creates a clear path for drivers and delivery workers to hold giant corporations accountable,” he said. “But make no mistake, we still believe that Prop 22, in its entirety, is an unconstitutional attack on our basic rights.”
The California Legislature passed a law in 2019 that changed the rules of who is an employee and who is an independent contractor. It’s an important distinction for companies because employees are covered by a wide range of labor laws that guarantee them certain benefits, while independent contractors are not.
While the law spanned many industries, it had the biggest impact on app-based ride-hailing and delivery companies. Their business relies on contracting people to use their cars to drive people around and make deliveries. Under the 2019 law, companies must treat these drivers as employees and provide certain benefits that will greatly increase business costs.
In November 2020, voters agreed to exempt app-based ride-hailing and delivery companies from the 2019 law by approving a ballot proposal. The proposal included “alternative benefits” for drivers, including a guaranteed minimum wage and health insurance subsidies if they worked an average of 25 hours a week. Companies like Uber, Lyft and DoorDash spent $200 million on the campaign to make sure it would pass.
Three drivers and the Service Employees International Union sued, arguing the ballot proposal is illegal in part because it limits the state legislature’s power to change the law or pass laws about workers’ compensation programs. In 2021, a state judge agreed with them and ruled that companies like Uber and Lyft were not exempt.
A state appeals court on Monday overturned that ruling, allowing the companies to continue treating their drivers as independent contractors.
The verdict may not be the final decision. The Service Employees International Union can still appeal the decision to the California Supreme Court, which could decide to hear the case.
“We will consider all of those options as we determine how to ensure that we continue to fight for these workers,” said Tia Orr, executive director of SEIU California.