On Thursday, the California Supreme Court unanimously ruled that drivers for app-based companies like Uber, Lyft and DoorDash will remain independent contractors, rather than employees. The decision, which upholds a state ballot measure called Proposition 22, was seen as a major victory for gig economy companies.
The question of whether those who drive for companies should be treated as employees or contractors has led to a years-long legal battle in the state. In 2020, California voters approved Proposition 22, which allows app-based companies to continue treating their workers as independent contractors. That vote overturned an earlier court ruling that found such companies controlled their drivers’ working conditions too much to treat them as contractors. The campaign for the ballot measure cost its proponents — including Uber, Lyft, Postmates, Instacart and DoorDash — about $200 million, breaking state spending records.
Driver advocates have long argued that those behind the wheel are entitled to the same benefits offered to full-time employees, including health care, sick pay and workers’ compensation. Companies have said gig work is an entirely new, flexible form of work, and that treating drivers as employees would transform their businesses. A 2020 analysis suggested that treating drivers as employees in California would cost Uber and Lyft nearly $800 million annually in payroll taxes and benefits alone.
The 2020 ballot measure required app-based companies to institute a wage floor, at least for the time drivers spend with passengers in the car, and to pay health care stipends to workers who drove enough monthly hours.
“Today’s decision was supposed to bring justice, to confirm that even as workers who are managed by apps on our phone, by algorithms, by artificial intelligence, we are actually workers with robot managers,” Nicole Moore, president of Rideshare Drivers United and a part-time driver in Los Angeles, said during a briefing with reporters after the decision. “And we deserve the same rights and benefits as every other worker in our state. But that didn’t happen today.” Moore called on state lawmakers to find a “creative path” to ensure drivers are protected and paid fairly.
in a statementUber said the ruling put an “end to misguided attempts to force (drivers) into an employment model they overwhelmingly do not want.” Lyft also praised The decision: “We are pleased to continue bringing Californians closer to their friends, family and neighbors, and to provide drivers with access to flexible income opportunities and benefits while preserving their independence.”
On a call with reporters organized by Prop 22 advocates, some drivers said they were glad app-based companies were retaining their flexibility. “I’m very grateful right now,” said driver Stephanie Whitfield, who works in the Coachella Valley.
The ruling will not have a direct effect on other states’ laws on independent workers, but it could influence policies elsewhere. Both Minnesota and Colorado Recently passed laws institute better pay standards for app-based drivers, though neither resolved whether workers should be treated as contractors or employees. The Biden administration has pointed Misclassification of workers in the gig economy is hampered by new labor rules, although app-based companies say the rules do not affect their business.
