While competitors in the ride-sharing industry, Uber and Lyft have a similar business model created to allow California residents to earn a little extra money transporting people to various destinations. However, providing those workers “independent contractor” status got the attention of San Francisco, San Diego, and Los Angeles authorities who objected to the classification.
The state joined the high-profile cities in a lawsuit to give drivers more labor protections, mainly if they are involved in accidents with other vehicles or physical attacks from customers while doing their job. As independent contractors, they would not have the option of workers’ compensation and other types of benefits.
An Adverse Ruling and Pending Proposition
The case made it to a California appeals court with judges issuing a ruling on October 22 that ordered Uber and Lyft to classify their drivers as employees. The historic decision that could impact the state’s “gig economy” affirmed a lower court ruling that both companies were breaking state labor law.
With the case sent back to the trial court, the appellate judges are giving Uber and Lyft 30 days to change driver’s employment classification. During that time, the rideshare companies have the option of appealing to the California Supreme Court.
The convoluted nature of the legal tussle will become even more complicated come election day. Proposition 22 will place the fate of both companies in the hands of California voters. If passed, the referendum would give ride-hailing and food delivery companies the go-ahead to continue quasi-independent contractor status with limited benefits.
The gamble has seen Uber and Lyft spend almost $200 million to get to a “yes.” They are hoping that the appellate court decision will motivate Californians to approve the measure.
The rideshare companies are also exploring legal options. Both Uber and Lyft have vowed to pull up stakes and leave the state should their gig workers receive employee classifications with the perks that come with it.