Californian judges have ruled that Uber Technologies Inc. and Lyft Inc. must classify their drivers as employees.
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Uber Technologies Inc. and Lyft Inc. must class their drivers in California as employees, a state appeals court ruled on Thursday.
appealed a ruling by a San Francisco Supreme Court judge in August that the hailship services should immediately comply with the law, which resulted in companies threatening to stop serving their home state. California and the cities of San Francisco, Los Angeles and San Diego won the injunction in a lawsuit asking companies to comply with California law that went into effect in January.
As of August: Uber and Lyft have to hire drivers because California law is "overwhelming," the judge says
"We're addressing whether the court abused its discretion by issuing an injunction preventing Uber and Lyft from classifying their drivers as independent contractors," wrote Judge Jon B. Streeter on behalf of the three-judge California Court of Appeal. "Since we do not see any legal error, we come to the conclusion that the court acted at its discretion and accordingly confirm the decision made."
"This is a victory for the people of California and for any driver who has been denied fair wages, sick leave and other benefits from these companies," said Dennis Herrera, attorney for the city of San Francisco, in a statement Thursday.
In his statement, California Attorney General Xavier Becerra referred to the unemployment crisis: “Remember, companies like Uber and Lyft… don't pay into employee unemployment benefit funds. That means American taxpayers … are taking on the unemployment benefits gig workers are getting from the COVID bailout. "
Erica Mighetto, a Lyft driver and organizer at Rideshare Drivers United in the Bay Area and Sacramento, hopes the court's decision will make a difference to voters. "Given that Uber and Lyft advertisements are flooding our screens with Proposition 22 deception, it is comforting to know that our courts will not allow corporations to deprive workers of basic protection," she said.
Lyft said Thursday night it was considering appealing to the California Supreme Court, whose 2018 ruling in another worker classification case started state law that went into effect earlier this year and is now being enforced on the two companies. Also check his appointment options, it said.
"This decision makes it more urgent than ever for voters to stand by the drivers and vote yes on Prop. 22," said Julie Wood, a Lyft spokeswoman.
Uber reiterated his threat to leave the state, or at least limit his service in California.
“If voters don't say yes to Proposal 22, riders will be prevented from continuing to work as independent contractors, leaving hundreds of thousands of Californians unemployed and likely ending ridesharing across much of the state. Uber spokesman Davis White said.
William Gould, professor emeritus at Stanford Law School and former chairman of the National Labor Relations Board, said Thursday that he was not surprised the appeals court upheld the lower court's decision: "These companies have defied the law and appear ready to do so be with it. I think they don't stand a chance in the California Supreme Court. "
The ruling gives Uber and Lyft 30 days to comply after the appeals court follows certain legal processes that are unlikely to come before the election. Companies have 10 days to appeal to the state Supreme Court. However, it is unclear if they will do so within 12 days of the election. During this time, they again have the option of avoiding the classification of drivers as employees. California residents are voting on Proposition 22 to exempt gig economy companies like Uber, Lyft, and delivery services from state law.
More on Prop. 22: How Uber and Lyft's business model could be changed on election day
The most expensive sales campaign in California history raised more than $ 190 million from its proponents, with Uber ($ 53.5 million) and Lyft ($ 48.9 million) being the biggest backers. Opponents of the initiative, mostly made up of trade unions, have raised around $ 16 million.