- In November 2020, California voters passed Proposition 22, which allowed ride-sharing apps like Uber and Lyft to classify their drivers as independent contractors, limiting the companies’ obligation to provide certain benefits.
- A group of drivers questioned the proposal, and in 2021 a judge ruled it was unconstitutional.
- But on Monday, an appeals court overturned that decision, allowing Prop. 22 to stand.
Ride-sharing apps, including Uber and Lyft, can continue to treat their drivers as independent contractors, a California appeals court ruled Monday, overturning a lower court decision barring them from doing so.
In November 2020, California voters passed Proposition 22, which allowed rideshare and delivery app makers to classify their drivers as independent contractors. A California judge ruled the proposal unconstitutional in 2021, arguing it violated the legislature’s power to set standards in the workplace. The state and a group representing the companies and other parties appealed the decision, and Monday’s verdict went in their favor.
Shares in ridesharing and delivery companies rose on the news, with Uber, Lyft and Doordash up more than 4% after hours.
App-based gig worker Jesus Barra stands on his car during a demonstration outside Los Angeles City Hall to urge voters to vote no to Proposition 22, a November election measure that would establish app-based drivers as independent contractors and would not classify as employees or agents Los Angeles, California, U.S., October 8, 2020.
Mike Blake | Portal
Prop. 22 created a set of criteria that determined whether rideshare drivers were employees or independent contractors> In practice, it exempted Uber and similar companies from complying with certain minimum wage, overtime, or worker’s compensation laws for hundreds of thousands of California rideshare drivers. Instead, the voting measure required companies to provide compensation and “subsidies” for health care based on “committed” drive time, as well as other benefits, including safety training and “sexual harassment training.”
It was the most expensive voting expense in California history, with Rideshare contributing over $181 million to the Yes campaign. Companies reportedly acted aggressively to get their drivers to support the initiative, which passed with 58.6% of the vote.
A group of carpoolers attempted to strike down Proposition 22 and won a lower court decision. But in a 63-page opinion released Monday, California First Circuit Judges disagreed with that court and upheld the proposal.
“Proposal 22 does not interfere with the workers’ compensation authority of the legislature and does not violate the one-subject rule,” the statement said.
“Today’s verdict is a victory for app-based workers and the millions of Californians who voted for Prop 22. Across the state, drivers and couriers have said they are pleased with Prop 22, which offers them new benefits while preserving the unique flexibility of app-based work,” said Tony West, Uber’s chief legal officer, in a statement.