Uber, Lyft can treat drivers as contractors, California court says

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By Amit


Uber and Lyft can continue to treat their drivers as contractors in California, a state appeals court ruled Monday, in a major victory for the ride-share companies.

The ruling by the 1st District Court of Appeal in San Francisco overturned a lower court’s 2021 ruling that Proposition 22 — passed by California voters the previous year — was “unenforceable” and unconstitutional.

Proposition 22 exempts delivery-app and ride-share companies such as Uber and Lyft — pioneers of the digital gig economy — from classifying their drivers as full-time employees, meaning the companies do not have to provide benefits such as health insurance. (Under Proposition 22, they are only required to provide a stipend toward drivers’ health insurance coverage.)

Uber, Lyft and other gig-economy apps poured $200 million into the campaign to pass Prop 22, as it is commonly called. The measure passed with around 59 percent of the vote, but some voters said they misunderstood the question on their ballots and instead meant to give drivers more benefits, not fewer.

Monday’s ruling is likely to be appealed.

In a statement, Uber’s chief legal officer Tony West hailed the ruling as “a victory for app-based workers” and said Proposition 22 “affords them new benefits while preserving the unique flexibility of app-based work.”

This is a developing story and will be updated.

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