California judge rules Uber, Lyft drivers are employees

SACRAMENTO, California (AP) — A judge on Monday ordered ride-hailing giants Uber and Lyft to treat their California drivers as employees instead of independent contractors, a shift that would guarantee benefits like overtime, sick leave and expense reimbursement for workers who make up much of the freewheeling gig economy.

But the ruling from San Francisco Superior Court Judge Ethan P Schulman won’t take effect right away as both Uber and Lyft said on Monday they will immediately appeal to a higher court, which could put the ruling on hold as the case continues.

Still, advocates praised the ruling as a milestone in their fight to apply traditional worker protections to a fast-growing segment of the labour force. But the companies criticised the decision, saying it threatens to shut them down during a pandemic-induced economic downturn where many people who have lost their jobs turn to the ride-hailing companies to make money.

“Our elected leaders should be focussed on creating work, not trying to shut down an entire industry during an economic depression,” Uber spokesperson Davis White said.

The lawsuit was filed by California Attorney General Xavier Becerra and the city attorneys of Los Angeles, San Diego and San Francisco under a new California law that says companies can only classify workers as contractors if they perform work “outside the usual course” of their business.

The law has wide-reaching implications across a number of sectors, but none more so than the ride-hailing industry. The companies have already challenged the law in federal court, where their efforts to stop it from taking effect have, so far, failed. And they have pledged to spend more than a hundred million dollars to support a ballot measure in November that, if approved by voters, would exempt them from the law.

Lawyers for Uber and Lyft said drivers are not fundamental to the business, arguing the companies are “multi-sided platforms” whose activities encompass much more than transportation. But Schulman rejected those arguments, writing in a 34-page opinion that the argument “flies in the face of economic reality and common sense”.

A Lyft logo is installed on a Lyft driver’s car next to an Uber sticker in Pittsburgh. PHOTO: AP