California appeal court allows for Uber, Lyft worker to be classified as individual contractors

A Californian appeals court has ruled that “gig” economy firms like Uber and Lyft can continue to treat their state-based drivers as independent contractors. This verdict comes in a case regarding a labour measure known as Proposition 22. Labour groups have for long opposed the measure; they claim that it robs them of sick leave and other rights. The appeals court, however, found the measure largely constitutional. This decision overturns an earlier decision by a lower court. The 2021 verdict said that Proposition 22 affected lawmakers’ powers to set standards at the workplace.

A three-judge panel on Monday ruled that the measure was legal and California-based workers at Uber, Lyft and other similar firms can continue to be treated as independent contractors. 

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The judges, however, removed a clause that put restrictions on collective bargaining by the independent contractors.

Uber’s chief legal officer, Tony West, hailed the verdict and said that “today’s ruling is a victory for app-based workers and millions of Californians who voted for Prop 22.”

“We’re pleased that the court respected the will of the people and that Prop 22 will remain in place, preserving independence for drivers,” he added.

Lyft too celebrated the victory and said that Proposition 22 “protects the independence drivers value and gives them new, historic benefits.”

Following the ruling, shares of the two companies experienced an almost five per cent high in after-hours trading. Proposition 22 was passed by Californian voters in November 2020. Since then, many drivers and labour groups have opposed it. They claim that the proposition denies gig workers benefits like sick days, leave and overtime pay, all of which are available to ’employees’. 

(With inputs from agencies)

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