Uber, Lyft Lose AB5 Appeal In California

Silicon Valley rideshare giants Uber and Lyft must abide by a California Court of Appeals’ decision that they can no longer classify their drivers as independent contractors, pending a ballot measure giving voters a say on election day (Nov. 3).

In a unanimous decision, the appeals court upheld an earlier ruling that both rideshare startups must re-classify their drivers as California state employees, according to a Reuters report on Friday (Oct. 23).

The ruling will not take effect until voters weigh in on Proposition 22 on Nov. 3. The ballot measure gives the public some input about the status of gig workers and has been heavily promoted and backed by Uber, Lyft and Doordash.

In a 74-page ruling, the appellate judges maintain that both companies caused “irreparable harm to drivers” by classifying workers as independent contractors and denying them benefits that regular employees receive.

The judges decided that the public’s interest is better served if the damage is rectified rather than the companies and their shareholders protected.

“When violation of statutory workplace protections takes place on a massive scale, as alleged in this case, it causes public harm over and above the private financial interest of any given individual,” the appellate court said in its ruling, according to a Sacramento Bee report.

Uber and Lyft have said that as a technology platform, all they do is match drivers and passengers. As independent contractors, drivers are free to work when and where they want for as many or few hours as they prefer. They can also work every day or a few times a month, for an hour at a time or a dozen.

“This ruling makes it more urgent than ever for voters to stand with drivers and vote yes on Prop. 22,” Lyft said in a statement, per reports.

“Today’s ruling means that if the voters don’t say Yes on Proposition 22, rideshare drivers will be prevented from continuing to work as independent contractors, putting hundreds of thousands of Californians out of work and likely shutting down ridesharing throughout much of the state,” Uber said.

Gov. Gavin Newsom signed AB 5 into law September 2019, and it took effect in January. The law requires that companies using gig workers treat them as employees rather than independent contractors.