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 circumvent other state laws that They demand protection and benefits for workers.
The ruling mostly upholds a voter-approved law, called Proposition 22, which says drivers for companies like Uber and Lyft are independent contractors and are not entitled to benefits like paid sick leave and unemployment insurance. A lower court ruling in 2021 had said Proposition 22 was illegal, but Monday’s ruling reversed that decision.
“Today’s ruling is a victory for app-based workers and the millions of Californians who voted for Proposition 22,” said Tony West, Uber’s chief legal officer. “We are pleased that the court has respected the will of the people.”
The ruling is a defeat for the unions and their allies in the state Legislature, who passed a law in 2019 requiring companies like Uber and Lyft to treat their drivers like employees.
“Today, the Court of Appeals decided to support corporations powerful over workers, allowing companies to buy their way out of our state’s labor laws and undermine our state constitution,” said Lorena González Fletcher, leader of the California Labor Federation. and former state assemblyman. she who drafted the 2019 law. “Our system is broken. It would be an understatement to say that we are disappointed by this decision.”
The ruling was not a total defeat for the unions, as the court ruled that companies could not stop their drivers from joining a union and collectively bargaining for better working conditions, said Mike Robinson, one of the drivers who filed the lawsuit. contesting the proposal. 22
“Our right to unite and bargain collectively creates a clear path for drivers and delivery workers to be held accountable to giant corporations,” he said. “But make no mistake, we still believe that Proposition 22, in its entirety, is an unconstitutional attack on our basic rights.”
The California Legislature passed a law in 2019 that changed the rules for who is an employee and who is an independent contractor. It’s an important distinction for businesses because employees are covered by a wide range of employment laws that guarantee them certain benefits while independent contractors don’t.
While the law applied to many industries, it had the biggest impact on app-based transportation and delivery companies. His business is based on hiring people to use their own cars to drive people around and make deliveries. Under the 2019 law, companies would have to treat those drivers as employees and provide certain benefits that would add significantly to business expenses.
In November 2020, voters agreed to exempt app-based trucking and delivery companies from the 2019 law by approving a ballot measure. The proposal included “alternative benefits” for drivers, including a guaranteed minimum wage and health insurance subsidies if they average 25 hours of work per week. Companies like Uber, Lyft, and DoorDash spent $200 million on a campaign to make it happen.
Three drivers and the Southern Service Employees International Union, arguing that the ballot measure was illegal in part because it limited the authority of the state Legislature to change the law or pass laws on workers’ compensation programs. In 2021, a state judge agreed with them, ruling that companies like Uber and Lyft were not exempt.
On Monday, a state appeals court reversed that decision, allowing the companies to continue treating their drivers as independent contractors.
The ruling may not be the final decision. The Service Employees International Union could 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 decide how to make sure we continue to fight for these workers,” said Tia Orr, SEIU California executive director.