Uber, Lyft hit with bombshell driver ruling as key US vote looms


Proposition 22, which is set for a vote Nov 3, exempts the companies from paying for full benefits that employees currently get under California law, such as unemployment insurance and complete workers compensation, while requiring a pay guarantee for drivers’ time on trips, health care contributions and medical and disability coverage, among others. — AFP

Uber Technologies Inc and Lyft Inc face the gravest threat yet to their business models after an appeals court ruled they must treat their drivers in California as employees instead of independent contractors.

The bombshell decision on Oct 22 comes less than two weeks before an election in which the ride-hailing companies are counting on voters to approve a ballot measure that would partially exempt them from the labour law at issue in the legal fight. If the vote doesn’t go their way, Uber and Lyft are threatening to shut down in their home state.The ruling upheld a lower court’s order that the companies comply with Assembly Bill 5 –which took effect in January – and provide drivers with the costly benefits that employee status confers.

“Although the business context may be relatively new, we conclude that the injunction was properly issued in accordance with enduring principles of equity,” the three-judge appeals panel said in its ruling. “It is broad in scope, no doubt, but so too is the scale of the alleged violations.”

Wrenching changes

Uber and Lyft are helping bankroll Proposition 22 in the most expensive ballot-measure campaign in California history. Polls have indicated the election outcome is too close to call.

“Today’s ruling means that if the voters don’t say yes on Proposition 22, rideshare drivers will be prevented from continuing to work as independent contractors, putting hundreds of thousands of Californians out of work and likely shutting down ridesharing throughout much of the state,” Uber said in a statement.

Lyft said it was considering an appeal to the California Supreme Court.

Proposition 22, which is set for a vote Nov 3, exempts the companies from paying for full benefits that employees currently get under California law, such as unemployment insurance and complete workers compensation, while requiring a pay guarantee for drivers’ time on trips, health care contributions and medical and disability coverage, among others.

The appeals court rejected the argument put forth by Uber and Lyft that the Aug 10 injunction issued against them was “radical” or “unprecedented”.

‘Modern technology’

“These adjectives perhaps say more about the reach of modern technology and the scale of today’s technology-driven commerce than they do about the order itself,” the panel said.

The ruling was hailed by opponents of Proposition 22.

“No matter how many times Uber and Lyft break the law, Attorney General Xavier Becerra and city attorneys have had rideshare drivers’ backs as we demanded what the law clearly guarantees us: sick pay, unemployment insurance, and workers’ compensation,” said Uber and Lyft driver Jerome Gage.

Gig Workers Rising, an organisation representing some drivers, called the court’s decision a huge victory.

“First the state legislature, then the governor, and now the courts have all agreed that drivers are employees under state law, and Prop. 22 is nothing more than an attempt by multi-billion dollar gig companies to undo that recognition,” the group said in an emailed statement. – Bloomberg

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3
   

Did you find this article insightful?

Yes
No

100% readers found this article insightful

Next In Tech News

China tops world in AI patent filings, surpassing the US for the first time
SAIC Motor, an early adopter of the smart car, sets up US$1bil fund to invest in Internet-linked vehicles with Alibaba
Greece puts faith in online schooling
PDRM: Fake Bank Negara apps and websites cost victims RM5.2mil in losses
Amazon unions from Brazil to Germany plan Black Friday protests
Black Friday offers beacon of hope to struggling US stores
Man Utd working with cyber agency after ‘disruptive’ attack
Dating apps see matches bloom in India
US teens develop sanitising drone to help clean school during pandemic
UK to launch new watchdog next year to police tech giants

Stories You'll Enjoy