California Court Upholds Uber, Lyft Drivers’ Contractor Status
On Thursday, California’s top state court upheld a measure approved by voters that allows app-based services like Uber and Lyft to classify drivers in the state as independent contractors rather than employees entitled to greater benefits.
The ruling by the California Supreme Court represents a significant victory for the ride-hailing industry, which had argued that many companies would either end or limit service in the state if forced to treat thousands of drivers as employees.
The court dismissed a lawsuit filed by the Service Employees International Union (SEIU) and four drivers, which argued that the 2020 ballot measure known as Proposition 22 was unconstitutional. Prop 22 maintains drivers’ contractor status while granting them some benefits.
Uber praised the ruling, stating it upheld “the will of the nearly 10 million Californians who voted to deliver historic benefits and protections to drivers, while protecting their independence.”
Despite the ruling, SEIU California Executive Director Tia Orr emphasized that the fight for greater workplace rights and protections for gig workers continues, with efforts to unionize being a key strategy.
The classification of gig workers is a critical issue for the ride-service industry, as employees are entitled to protections such as minimum wage, overtime pay, and expense reimbursements, which do not extend to independent contractors. Companies can save up to 30% by classifying workers as contractors, according to several studies.
Uber, Lyft, and other app-based services spent over $200 million campaigning for Prop 22, which was passed in November 2020 by nearly 60% of California voters. The measure allows drivers to be classified as independent contractors if they earn at least 120% of the minimum wage while transporting passengers, and receive expense reimbursements and health insurance subsidies.
A state appeals court had previously rejected SEIU’s argument that Prop 22 improperly limited the legislature’s power to regulate the state’s workers’ compensation system. The California Supreme Court agreed with this decision on Thursday.
California’s ruling is part of a broader national debate over the classification of gig workers. Recent legislative actions in Minnesota and Massachusetts also address gig worker rights and compensation, highlighting the ongoing, nationwide nature of this issue.
