California Court Says Uber, Lyft Workers Are Contractors

A California court has ruled that “gig economy” companies such as Uber and Lyft and delivery firm Doordash can continue to treat their workers as independent contractors, overturning a lower court’s decision.

In a 63-page opinion published on Monday a panel of three judges from the 1st District Court of Appeal sided with the state of California and a group representing Uber, Lyft and others in largely upholding Proposition 22, which allows the contractor designation.

“Proposition 22 does not intrude on the Legislature’s workers’ compensation authority or violate the single-subject rule,” the opinion states.

California voters approved Proposition 22 in November 2020 following record-breaking spending by ride-share companies, who contributed more than $181 million (£149m) to the “Yes” campaign, making the ballot issue the most expensive in California’s history.

App-based working

The measure followed shortly after California had moved to force Uber, Lyft and others to classify their workers as employees.

A group of ride-share drivers challenged the proposition’s constitutionality and a lower court found in 2021 that Proposition 22 restricted lawmakers’ powers to set standards in the workplace.

Monday’s decision reverses the lower court’s finding, but removes a clause from Proposition 22 that restricted collective bargaining by workers.

Shares in Uber, Lyft and Doordash rose almost 5 percent in after-hours trading.

“Today’s ruling is a victory for app-based workers and millions of Californians who voted for Prop 22,” said Uber chief legal officer Tony West.

‘Independence’

“We’re pleased that the court respected the will of the people and that Prop 22 will remain in place, preserving independence for drivers.”

Lyft said the proposition “protects the independence drivers value and gives them new, historic benefits”.

The Service Employees International Union, which challenged the proposition’s constitutionality with several drivers, said it was considering appealing.