Uber and Lyft have been told by a California appeals court that they must reclassify drivers as employees – but the businesses are hoping that a vote next month could change this.
On Thursday (22 October), Uber and Lyft lost their appeal against a California court that ordered the two companies to reclassify their drivers as employees rather than contractors.
The First District Court of Appeal in San Francisco laid out its reasoning in a 74-page document, which affirmed a ruling made on 10 August. The original court decision had stated that the ride-hailing businesses needed to provide drivers with the benefits that full employees receive under California’s new AB-5 law.
In response to the August ruling, Uber threatened to temporarily shut down operations in California, saying that it could take months to adjust to the changes ordered by the court. The appeals court then decided to grant Uber and Lyft a temporary reprieve, allowing them to continue operating in the same manner until their appeal was decided upon.
While this appeal has now been rejected, California’s injunction against the two companies will not go into effect until 30 days after the formal rejection of Uber and Lyft’s appeal.
What this means
Because the injunction has now been further delayed, it will not go into effect until after voters in California respond to a ballot measure entitled Prop 22. This measure could exempt these companies from AB-5, as explained by The Verge.
Uber, Lyft, DoorDash and other businesses that use gig workers have spent around $186m encouraging the public to vote in favour of Prop 22 on the 3 November election day.
According to TechCrunch, Prop 22 is the most-funded campaign in California’s history.
Commenting on the rejected appeal, a spokesperson for Uber said: “Today’s ruling means that if the voters don’t say yes on Proposition 22, ride-share drivers will be prevented from continuing to work as independent contractors, putting hundreds of thousands of Californians out of work and likely shutting down ride-sharing throughout much of the state.”
Fighting against Prop 22
Meanwhile, a number of Uber drivers are taking a stand against the company’s advertising efforts in the run-up to voting day. Uber drivers Benjamin Valdez and Hector Castellanos are suing the company, with the support of non-profit organisations Worksafe and the Chinese Progressive Association.
In a statement, attorney for the plaintiffs David Lowe commented: “Uber’s threats and constant barrage of Prop 22 propaganda on an app the drivers must use to do their work have one purpose: to coerce the drivers to support Uber’s political battle to strip them of workplace protections.”
The suit against the company argues: “Uber’s solicitations have the purpose and effect of causing drivers to fear retaliation by Uber if they do not support Uber’s political preference and may induce many drivers to falsely state that they support being deprived of the rights that California law guarantees to statutory ‘employees’.”
A spokesperson for Uber commented: “This is an absurd lawsuit, without merit, filed solely for press attention and without regard for the facts. It can’t distract from the truth: that the vast majority of drivers support Prop 22, and have for months, because they know it will improve their lives and protect the way they prefer to work.”