The California Supreme Court on Thursday unanimously ruled that drivers for app-based companies including Uber, Lyft and DoorDash will remain independent contractors, not employees. The decision, upholding a state ballot initiative known as Proposition 22, was hailed as a major victory for gig economy companies.
The question of whether people working for companies should be treated as employees or contractors has sparked a years-long legal battle in the state. In 2020, California voters approved Proposition 22, allowing app-based companies to continue treating their workers as independent contractors. The vote reversed an earlier court ruling that said such companies controlled too much of their drivers’ working conditions to treat them as contractors. The ballot measure campaign has cost supporters, including Uber, Lyft, Postmates, Instacart and DoorDash, about $200 million, breaking state spending records.
Driver advocates have long argued that drivers should receive the same benefits as full-time employees, including health care, infirmed pay and workers’ compensation. Companies say gig work is a fresh and malleable form of work, and treating drivers like employees would transform their businesses. One 2020 analysis suggested that treating drivers like employees in California would cost Uber and Lyft nearly $800 million a year in payroll taxes and benefits alone.
In a 2020 vote, app-based companies pledged to set a minimum wage, at least for the time drivers spend with passengers in the car, and to pay health benefits to employees who work enough hours per month.
“Today’s decision was supposed to bring justice, to acknowledge that even as workers who are managed by apps on our phones, by algorithms, by artificial intelligence, we are indeed workers with robotic managers,” Nicole Moore, president of Rideshare Drivers United and a part-time driver in Los Angeles, said in a briefing with reporters after the decision. “And we deserve the same rights and benefits as any other worker in our state. But that didn’t happen today.” Moore urged state lawmakers to find “creative paths” to provide protections and fair pay for drivers.
IN statementUber said the ruling “put an end to misguided extortion efforts” [drivers] to an employment model that the enormous majority of them do not want.” Lyft also praised decision: “We look forward to continuing to connect Californians with their friends, family and neighbors, and providing drivers with access to flexible earning opportunities and benefits while protecting their independence.”
During a call with reporters organized by Proposition 22 supporters, some drivers said they were glad app-based companies would retain flexibility. “I’m just so grateful right now,” said driver Stephanie Whitfield, who works in the Coachella Valley.
The ruling won’t have a direct impact on ephemeral worker laws in other states, but it could affect policy elsewhere. Both Minnesota and Colorado recently passed laws introducing better pay standards for app-based drivers, although neither has ruled on whether workers should be treated as contractors or employees. The Biden administration has aimed on the misclassification of gig economy workers through fresh labor laws, although app-based companies say these laws have no impact on their operations.