Whether gig workers should be treated as employees or contractors is a crucial issue for the ride service industry. — Reuters
NEW YORK: Judges on California’s top court are considering if voters have the power to allow app-based services such as Uber and Lyft to classify drivers in the state as independent contractors rather than as employees with greater benefits.
The seven-member California Supreme Court heard oral arguments in San Francisco in a lawsuit by the Service Employees International Union (SEIU) and four drivers who say a 2020 ballot measure known as Proposition 22 was unconstitutional.The measure exempts app-based drivers from a 2019 state law that narrowed the circumstances in which many workers can be treated as contractors.
Whether gig workers should be treated as employees or contractors is a crucial issue for the ride service industry.
Employees are entitled to the minimum wage, overtime pay, reimbursements for expenses and other protections that do not extend to independent contractors, who as a result can cost companies up to 30% less.
Uber, Lyft and other app-based services spent more than US$200mil on a campaign to pass Prop 22 and have said that without it, the increased costs could force them to stop doing business in California, the largest US state.
Prop 22, which was passed in November 2020 by nearly 60% of voters in California, allows app-based transportation services to classify drivers as independent contractors as long as they are paid at least 120% of the minimum wage while passengers are in the car and drivers receive expense reimbursements and subsidies to pay for health insurance.
A lower appeals court last year rejected SEIU’s argument that Prop 22 improperly limited the legislature’s exclusive power to regulate the state’s workers’ compensation system by barring app-based drivers from receiving those benefits, which are only granted to employees. — Reuters
