A recent ruling by a state appeals court in California has allowed app-based ride hailing and delivery companies like Uber and Lyft to continue treating their drivers as independent contractors. This means that they are not required to provide worker protections and benefits, such as paid sick leave and unemployment insurance, as mandated by other state laws.
The ruling largely upholds Proposition 22, a law approved by voters, which established that drivers for companies like Uber and Lyft are independent contractors and not entitled to certain benefits. This decision reversed a previous ruling by a lower court in 2021 that deemed Proposition 22 illegal.
Uber’s chief legal officer, Tony West, hailed the ruling as a victory for app-based workers and the millions of Californians who supported Proposition 22. He expressed satisfaction that the court respected the will of the people.
On the other hand, the ruling is seen as a setback for labor unions and their allies in the state Legislature who had passed a 2019 law requiring companies like Uber and Lyft to classify their drivers as employees.
Lorena Gonzalez Fletcher, leader of the California Labor Federation and author of the 2019 law, expressed disappointment, stating that the court had sided with powerful corporations over working people and undermined the state constitution.
However, the ruling did acknowledge that the companies cannot prevent their drivers from joining a labor union and engaging in collective bargaining for improved working conditions. This was seen as a partial victory for unions.
The 2019 law passed by the California Legislature changed the criteria for determining employee status, with significant implications for app-based ride hailing and delivery companies. These companies heavily rely on independent contractors using their own vehicles for providing rides and making deliveries. The law would have required these drivers to be classified as employees and provided with additional benefits, leading to increased expenses for the companies.
In November 2020, voters approved a ballot proposition that exempted app-based ride hailing and delivery companies from the 2019 law. The proposition included “alternative benefits” for drivers, such as a guaranteed minimum wage and health insurance subsidies for those working a certain number of hours per week. The companies invested heavily in a campaign to ensure the proposition’s passage.
A lawsuit was filed by three drivers and the Service Employees International Union, arguing that the ballot proposition was illegal and restricted the Legislature’s authority to modify or enact laws regarding workers’ compensation programs. In 2021, a state judge ruled in favor of the plaintiffs and declared that companies like Uber and Lyft were not exempt.
The recent appeals court ruling has overturned the previous decision, allowing the companies to continue classifying their drivers as independent contractors.
While this ruling may not be the final word on the matter, as the Service Employees International Union could still appeal to the California Supreme Court, it has significant implications for the gig economy and worker classification in the state.
Tia Orr, executive director of SEIU California, stated that they would consider all options to continue fighting for the rights of these workers.
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