Court Rules Uber, Lyft Can Classify Gig Workers as Contractors

March 14, 2023 by

Uber Technologies Inc., Lyft Inc. and other gig economy companies scored a victory after a California appeals court upheld the current law classifying gig workers as independent contractors instead of employees.

The decision on Monday struck down a lower-court ruling that found Proposition 22, the state measure that lets companies treat workers as independent contractors, violated California’s constitution. The passing of Proposition 22 in November 2020 exempted the gig economy businesses from a state labor law requiring more companies to hire workers as employees and provide them benefits.

The latest ruling was a win for companies including Uber, Lyft, DoorDash Inc. and Instacart Inc. that rely on millions of drivers and couriers for on-demand services such as ride-sharing and food delivery. The companies collectively spent about $200 million on the campaign to help pass ballot measure.

“Across the state, drivers and couriers have said they are happy with Prop. 22, which affords them new benefits while preserving the unique flexibility of app-based work,” said Tony West, Uber’s chief legal officer. “We’re pleased that the court respected the will of the people, and that Prop. 22 will remain in force.”

Uber shares rose 4.4% in trading before New York exchanges opened on Tuesday after previously closing at $30.82. Lyft gained 4.9% in early trading after closing at $8.46 in New York.

Photograph: Lyft Inc. and Uber Technologies Inc. signage are displayed on the windshield of a vehicle at Los Angeles International Airport (LAX) in Los Angeles, Calif., on Wednesday, Sept. 11, 2019. Uber Technologies drivers in California sued the company for violating a new state law they say is specifically designed to end Uber’s practice of classifying the drivers as independent contractors, rather than employees. Photo credit: Allison Zaucha/Bloomberg

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