A California appeals court has ruled that Uber and Lyft can carry on treating workers as independent contractors, despite labour groups and workers opposing it.
The court found that a labour measure called Proposition 22 found that the companies are acting within the constitution by treating gig economy workers as self-employed.
This ruling means a decision made by a Californian court in 2020 will be overturned. The court originally ruled that workers needed to be treated as employees receiving full employment rights like sick leave and paid holidays. At the time, this was considered a big win for gig economy workers that followed similar rulings, including a landmark case in 2018 in the UK.
Campaigners had argued that they were missing out on employment protection. However, Uber and Lyft claim that being an independent contractor has other benefits, like the flexibility to choose your own hours, and many workers choose the role on this basis.
The three-judge panel agreed and the appeals court ruled that workers could be treated as contractors. However, it removed a clause from Proposition 22 that put restrictions on collective bargaining by workers, which was another concern raised by labour groups.
In a statement, chief legal officer at Uber Tony West said: “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.”
Lyft said that the ruling “protects the independence drivers value and gives them new, historic benefits.”
The ruling comes with some conditions, including requirements under the Proposition 22 labour measure that companies need to give contracted workers some benefits, including healthcare and accident insurance. Although some drivers backed this, others pointed out that drivers still miss out on some benefits that employees are entitled to, like overtime pay and sick days.