Court rules that Uber and Lyft can keep treating drivers as contractors in California

Uber and Lyft don't have to worry about reclassifying its workers in California for now. An appeals court has just ruled that gig workers, such as rideshare drivers, can continue to be classified as independent contractors under Proposition 22.

If you'll recall, California passed Assembly Bill 5 (AB5) in September 2019 that legally obligates companies to treat their gig workers as full-time employees. That means providing them with all the appropriate benefits and protections, such as paying for their unemployment and health insurance. As a response, Uber, Lyft, Instacart and DoorDash poured over $220 million into campaigning for the Prop 22 ballot measure, which would allow them to treat app-based workers as independent contractors. It ended up passing by a wide margin in the state.

In 2021, a group of critics that included the Service Employees International Union and the SEIU California State Council filed a lawsuit in 2021 to overturn the proposition. The judge in charge of the case sided with them and called Prop 22 unconstitutional. He said back then that the proposition illegally "limits the power of a future legislature to define app-based drivers as workers subject to workers' compensation law."

The three appeals court judges have now overturned that ruling, though according to The New York Times, one of them wanted to throw out Prop 22 entirely for the same reason the lower court judge gave when he handed down his decision. While the appeals court upheld the policy in the end, it ordered that a clause that makes it hard for workers in the state to unionize be severed from the rest of the proposition. That particular clause required a seven-eighths majority vote from the California legislature to be able to amend workers' rights to collective bargaining.

David Huerta, the president of the Service Employees International Union in California, told The Times in a statement: "Every California voter should be concerned about corporations’ growing influence in our democracy and their ability to spend millions of dollars to deceive voters and buy themselves laws." The group is now expected to appeal this ruling and to take their fight to the Supreme Court, which could take months to decide whether to hear the case.