SACRAMENTO, Calif. (AP) — App-based ride-hailing companies such as Uber and Lyft can continue to treat California drivers as independent contractors, a state appeals court ruled Monday, ruling the tech giant. were able to circumvent other state laws requiring worker protections. and benefits.
The ruling follows a voter-approved law called Proposition 22, which said drivers for companies like Uber and Lyft are independent contractors and are not entitled to benefits such as paid sick leave or unemployment insurance. almost support the A 2021 lower court ruling held Proposition 22 illegal, but Monday’s ruling overturned that ruling.
Tony West, Uber’s chief legal officer, said: “I am pleased that the court respected the will of the people.”
The ruling is a defeat for unions and their supporters in the state legislature, which in 2019 passed a law requiring companies like Uber and Lyft to treat their drivers as employees.
“Today, an appeals court chose to favor powerful corporations over workers, allowing corporations to step out of state labor laws and undermine the state constitution,” says the California Federation of Labor. leader and former state legislator Lorena Gonzalez-Fletcher said. who made the 2019 law.
According to Mike Robinson, one of the drivers who filed a lawsuit challenging the proposition, the ruling was not a total defeat for the union.
“Our right to organize and bargain collectively creates a clear path for drivers and delivery workers to hold huge gig companies accountable,” he said. “But make no mistake. I still believe Proposition 22 as a whole is an unconstitutional attack on our fundamental rights.”
In 2019, the California Legislature passed a law changing the rules for employees and independent contractors. This is an important difference for businesses. Because employees are subject to extensive labor laws that guarantee certain benefits, independent contractors are not.
The law applies to many industries, but has had the greatest impact on app-based ride-hailing and delivery companies. Their business relies on contracts with people and they use their own vehicles to pick and deliver people. Under the 2019 law, companies must treat these drivers as employees and offer them certain benefits that significantly increase the company’s costs.
In November 2020, voters agreed to exempt app-based ride-hailing and delivery companies from the 2019 law by approving a ballot proposal. The proposal included “alternative benefits” for drivers, such as minimum wage guarantees and health insurance subsidies if they worked an average of 25 hours a week. Companies like Uber, Lyft, and DoorDash spent his $200 million on the campaign to make sure it got through.
The three drivers and the Service Employees International Union sued, alleging that the ballot proposal was illegal because it restricted the legislature’s ability to change or pass laws relating to workers’ compensation programs. In 2021, state judges agreed with them, leaving controlled companies such as Uber and Lyft exempt.
On Monday, a state appeals court overturned that decision, allowing the company to continue treating drivers as independent contractors.
Arbitration may not be final. Service Employees International Union may appeal this decision to the Supreme Court of California.
“We will consider all of these options as we decide how to continue fighting for these workers,” said Tia Orr, executive director of SEIU California.
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