California Judge: Uber, Lyft Not Exempt From Classifying Drivers as Employees

By Shawna Chen, Axios

23 August 21

 

California judge on Friday ruled that a 2020 ballot measure exempting gig companies from for providing benefits for its workers is unconstitutional, the Sacramento Bee reports.

Why it matters: California voters approved the measure last November, ensuring gig companies aren't required to make their drivers employees. The victory gave the industry a playbook for facing labor movements nationwide.

Flashback: Gig companies spent over $200 million backing Prop. 22 to enshrine their workers as contractors in exchange for some limited benefits, including funding that can be used for health insurance.

• They were fighting a new state law that changed rules on worker classification.
  


• Companies like Uber, Lyft and DoorDash are now exempt from providing health care subsidies and wage floors for hundreds of thousands of drivers.
  

What they're saying: Prop. 22 "limits the power of a future Legislature to define app-based drivers as workers subject to workers’ compensation law," wrote Alameda County Superior Court Judge Frank Roesch wrote.

• That means the entire measure is unenforceable, Roesch said.
  

Gig Workers Rising lauded the decision. Prop. 22 "has always been an illegal corporate power grab that not only stole the wages, benefits and rights owed to gig workers but also ended the regulating power of our elected officials, allowing a handful of rogue corporations to continue to act above the law," Shona Clarkson, lead organizer for the advocacy group, said in a statement.

• "This fight is not over until all gig workers receive the living wages, benefits and voice on the job they have earned."
  

The other side: "We believe the judge made a serious error by ignoring a century’s worth of case law requiring the courts to guard the voters’ right of initiative," Geoff Vetter, a spokesperson for the Protect App-Based Drivers & Services Coalition, said in a statement.

• "This outrageous decision is an affront to the overwhelming majority of California voters who passed Prop. 22," Vetter added, noting they plan to file an immediate appeal.
  

Our thought bubble, via Axios' Kia Kokalitcheva: Given how dependent the companies’ business models are on Prop. 22 — and how much money they spent on the ballot measure — they’ll surely fight this ruling as long as they can.

The big picture: Uber and Lyft, among others, rolled out the first of the new benefits they'd promised last December.