On 20 March, 2023, a California appeals court upheld a state law that permits companies like Uber and Lyft to classify their drivers as independent contractors rather than employees. The decision is a significant win for app-based, on-demand companies and was praised by Uber’s chief legal officer as a victory that “preserves independence for drivers.”
The ruling is based on a measure called Proposition 22, which was passed in the state in 2020 with significant support from ride-share firms and food-delivery app platforms.
However, this victory came after a judge ruled in August 2021 that the referendum was unconstitutional, raising further legal challenges for the measure. Proposition 22 overturned a California law requiring app-based companies to reclassify their drivers as employees and provide them with employee benefits.
Under the proposition, drivers remain independent contractors, but Uber and Lyft are required to offer them certain benefits, including a minimum wage and contributions to healthcare and insurance.
Labour groups have opposed the measure, arguing that it erodes worker rights and benefits. Nonetheless, the appeals court ruled that Proposition 22 “does not intrude on the Legislature’s workers’ compensation authority.”
While some drivers have criticised the proposition for not providing them with all the employee benefits, supporters argue that it guarantees some benefits while still allowing drivers to retain their independence.
The decision is expected to have implications beyond California, as other states could follow its lead in rewriting labour laws. Critics, however, fear that this could result in the erosion of employee rights and benefits.
The union group that challenged the law in court hopes to appeal the decision to the state supreme court. For now, Proposition 22 remains in effect, and it remains to be seen how it will impact the future of gig work in California and beyond.
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