Uber and Lyft drivers remain independent contractors in California Supreme Court ruling
SACRAMENTO, California — The California Supreme Court ruled Thursday that app-based ride-hailing and delivery services such as Uber and Lyft can continue to treat their drivers as independent contractors rather than employees.
The unanimous decision by the state Supreme Court is a major victory for tech giants. It also ends a years-long legal battle between unions and tech companies over a law that dictates the status of app-based service workers in the state.
The ruling upholds a voter-approved law passed in 2020 that says drivers for companies like Uber and Lyft are self-employed and not entitled to benefits such as overtime, paid sick leave and unemployment insurance. Opponents said the law was illegal in part because it limited the state legislatureâs authority to change the law or pass laws governing workersâ compensation programs.
A lower court ruling in 2021 had said the measure was illegal, but an appeals court that decision was reversed last year. The California Supreme Court’s decision means that companies like Uber and Lyft can continue to operate as before.
Uber called the ruling âa victoryâ for drivers. Companies including Uber, Lyft and DoorDash spent $200 million in 2020 campaigning to pass the law.
âWhether drivers or couriers choose to earn just a few hours a week or more, their freedom to work when and how they want is now firmly enshrined in California law, ending misguided efforts to coerce them into an employment model they overwhelmingly do not want,â the company said in a statement Thursday.
The ruling is a defeat for unions and their allies in parliament, who have fought for greater rights for drivers.
“What’s happening is not normal. It’s not what California is about,” said Nicole Moore, president of Rideshare Drivers United in Los Angeles. “It’s a sad day for workers.”
Unions vowed to continue fighting to protect jobs and benefits for drivers, noting that an earlier appeals ruling had allowed the Legislature to pass laws allowing drivers to unionize.
âWe are committed to strongly supporting disenrolled and left-behind workers in our economy and helping them overcome significant barriers to achieving their union rights,â April Verrett, president of the Service Employees International union, said in a statement.
Lawmakers in 2019 passed a law aimed directly at Uber and Lyft, requiring them to provide drivers with protections like a minimum wage, overtime, health insurance and expense reimbursement. It changed Californiaâs rules on who is an employee and who is self-employed.
While the law applied to many industries, it had the biggest impact on app-based ride-hailing and delivery companies. Their businesses depend on contracting with people to use their own cars. Under the 2019 law, companies would have to treat those drivers as employees and provide certain benefits that would significantly increase the companyâs costs.
In November 2020, voters approved a ballot measure to exempt app-based ride-hailing and delivery companies from the law. The measure included âalternative benefitsâ for drivers, including a guaranteed minimum wage and health insurance subsidies if they work an average of at least 25 hours per week.
Union groups and drivers across the country are pushing for more job protections, higher wages and increased benefits. Massachusetts leaders are rallying behind what they describe as a first voting question of its kind which, if approved, could give them trade union rights.