California Court Ruling A Game-Changer For Uber, Lyft

KEY POINTS

A California appeals court has ruled that Uber and Lyft must comply with laws mandating they treat their drivers as employees, guaranteeing minimum wage and benefits
Uber and Lyft say they would fire their workers and pull out of the state if they are forced to comply

A California appeals court upheld a ruling that Uber and Lyft must treat their drivers as employees, which would require them to pay minimum wage and give benefits.

The ruling would not go into effect before a ballot measure allows voters to decide, but it does mean ride-hailing companies have limited options if voters deem drivers worthy of a minimum wage. Uber released a statement saying it would fire drivers and pull out of swaths of California if it had to give drivers benefits, Reuters reports.

Uber saw strong gains in its meal delivery operations in the past quarter, but not enough to offset the 75 percent drop in ride-hailing revenues AFP / Ludovic MARIN

The suit was prompted by ABS, a law specifying that workers for gig-economy apps like ride-hailing and food delivery businesses are employees, meaning their employers must respect labor laws. This would mandate minimum wage and benefits.

Uber and Lyft did not comply and were sued by the state of California in May. In August the court ruled against them, and they threatened to leave the state before appealing to higher courts.

The ride-hailing companies also started a ballot measure asking voters to allow them to continue denying their drivers labor protections. The measure will be decided Nov. 3.

The appeals court unanimously upheld the lower court’s decision Thursday, saying harm to drivers outweighs the interests of “protecting Uber, Lyft, their shareholders, and all of those who have come to rely on the advantages of online ride-sharing.”

The ruling would not go into effect before the ballot measure, and Uber and Lyft have been reiterating their threat to pull out of the state if they have to pay their drivers minimum wage.

“Today’s ruling means that if the voters don’t say yes on proposition 22, rideshare drivers will be prevented from continuing to work as independent contractors, putting hundreds of thousands of Californians out of work and likely shutting down ridesharing throughout much of the state,” said a statement from Uber.

Lyft tried to make the case that ABS was bad for their workers, saying that voters should vote yes to repealing the law to “stand with drivers.”

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