Drivers for ride hailing firms such as Uber and Lyft, could be facing a significant change in their legal employment status, after a court ruling in California.
The ruling could also have wide-ranging implications for the so-called gig economy, after a US judge ruled that Uber and Lyft must classify their drivers as employees rather than freelancers or contractors.
The ruling a defeat for the ride hailing firms, which were defending themselves against lawsuit that was filed in may by state Attorney General Xavier Becerra and the cities of Los Angeles, San Diego and San Francisco.
Months later Judge Ethan Schulman of San Francisco Superior Court granted the state’s request for a preliminary injunction blocking Uber and Lyft from classifying their drivers as independent contractors rather than employees, Reuters reported.
Both companies had been accused of violating California’s Assembly Bill 5 (“AB5”), which is a new state law requiring companies to classify workers as employees if they controlled how workers did their jobs, or the work was part of their normal business.
Both Uber and Lyft have suffered during the Coronavirus pandemic, with both firms reporting a massive slump in their core ride-hailing business.
And the bad news continued after the judge in his 34-page decision, blamed both companies’ “prolonged and brazen refusal” to comply with state law.
Indeed, Judge Schulman reportedly said the plaintiffs showed an “overwhelming likelihood” they could prove Uber and Lyft classified drivers illegally.
“This is a resounding victory for thousands of Uber and Lyft drivers who are working hard – and, in this pandemic, incurring risk every day – to provide for their families,” Los Angeles City Attorney Mike Feuer reportedly said in a statement.
Schulman delayed enforcing his order by 10 days to allow appeals, which Lyft said it will pursue.
“Drivers do not want to be employees,” Lyft was quoted by Reuters as saying in a statement. “Ultimately, we believe this issue will be decided by California voters and that they will side with drivers.”
Uber did not immediately respond to requests for comment.
Uber last week expanded its ride-hailing reach in the UK with the purchase of Autocab for an undisclosed amount.
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