The California Supreme Court unanimously ruled on Thursday that drivers for app-based companies like Uber, Lyft and DoorDash remain independent contractors, not employees. The decision upheld the state’s ballot measure, Proposition 22, and was seen as a major victory for gig economy companies.
The question of whether drivers who work for companies should be treated as employees or contractors has sparked a long-running legal battle in the state. In 2020, California voters approved Proposition 22, allowing app-based companies to continue treating their workers as independent contractors. The vote overturned an earlier court ruling that said the companies had too much control over drivers’ working conditions to treat them as contractors. The ballot initiative cost backers including Uber, Lyft, Postmates, Instacart and DoorDash about $200 million, breaking spending records for the state.
Driver advocates have long argued that drivers should have the same kinds of benefits as full-time employees, including health care, sick pay, and workers’ compensation insurance. Companies argue that gig work is an entirely new form of flexible labor and that treating drivers as employees would restructure their businesses. One 2020 analysis suggested that treating drivers as employees in California would cost Uber and Lyft about $800 million a year in payroll taxes and benefits alone.
The 2020 vote required app-based companies to set a minimum wage for at least the time drivers spend in the car with passengers, and to pay health care benefits to workers who drive enough hours each month.
“Today’s ruling was supposed to bring justice and affirm that even though we are workers managed by cell phone apps, algorithms and AI, we are still workers of robot managers,” Nicole Moore, president of Rideshare Drivers United and a part-time driver in Los Angeles, said at a press conference after the ruling. “And we deserve the same rights and benefits as every other worker in our state. But that didn’t happen today.” Moore called on state lawmakers to find “creative paths” to ensure drivers are protected and paid a fair wage.
Uber said in a statement that the ruling “puts an end to a misguided attempt to force[drivers]into an employment model that they overwhelmingly do not want.” Lyft also praised the ruling, saying it was “pleased to help bring Californians closer to their friends, family and neighbors, and provide flexible earning opportunities and access to benefits while preserving our drivers’ independence.”
At a news conference organized by supporters of Proposition 22, some drivers said they were glad the app-based companies would maintain the flexibility. “Right now we’re just grateful,” said Stephanie Whitfield, a driver who works in the Coachella Valley.
The ruling is unlikely to directly affect gig worker laws in other states, but it could have an impact on policies elsewhere. Minnesota and Colorado recently passed laws improving pay standards for app-based drivers, but neither resolved whether workers should be treated as contractors or employees. The Biden administration has targeted misclassification of workers in the gig economy through new labor rules, but app-based companies say those rules won’t affect their business.
