Judge Orders Uber, Lyft To Classify Drivers As Employees Under California Law

The major ride-hailing companies plan to appeal the decision, which would obligate them to provide additional benefits to drivers.

A judge in California granted a preliminary injunction on Monday requiring major ride-hailing companies Uber and Lyft to classify their drivers as employees, rather than as independent contractors — which would mean the companies have to provide them with additional benefits.

In the ruling, the San Francisco judge accused the companies of a “prolonged and brazen refusal to comply with California law,” saying it was “high time that they face up to their responsibilities to their workers and to the public.”

California’s Assembly Bill 5, signed into law last year and in effect since January, clarified the conditions under which workers should be considered employees, and therefore entitled to benefits like a minimum wage, unemployment and disability insurance, a right to form a union and more.

Uber and Lyft have been fighting the measure. The companies’ bottom lines will be dramatically affected if thousands of drivers are reclassified as employees and entitled to benefits like overtime pay or paid sick leave and family leave.

Monday’s injunction was granted as part of a lawsuit by California Attorney General Xavier Becerra, filed in May against Uber and Lyft for not reclassifying their drivers as employees under the state’s new law.

However, the injunction will be “stayed” for 10 days, during which time the companies can appeal the decision. Both companies said in statements Monday that they plan to file “immediate” appeals.

Uber and Lyft have also put tens of millions of dollars toward a statewide ballot initiative for California voters to decide if the companies can essentially exempt their drivers from the legislation. The companies claim the new law doesn’t allow them to provide flexibility to drivers to choose their schedules and hours.

California’s attorney general insists this is not true.

“During this global pandemic, it’s even more important for drivers to get access to protections like unemployment insurance,” San Francisco City Attorney Dennis Herrera said in a statement. His office is part of the suit against Uber, along with city attorneys from San Diego and Los Angeles. “There is no rule that prevents these drivers from continuing to have all of the flexibility they currently enjoy. Being properly classified as an employee doesn’t change that.”

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