A California court ruled today that ride-sharing apps can continue treating their drivers as independent drivers, upholding the state’s controversial Proposition 22.
Prop 22 was a ballot initiative put to voters in California in 2020 that would make it so drivers working for companies such as Uber Technologies Inc. and Lyft Inc. would be classified as independent contractors and, therefore, not receive the benefits that employees legally receive. The vote went 58% in favor of the rule, which was a huge victory for the companies, which had earlier threatened to pull out of the state.
Ride-sharing apps and the gig economy, in general, have fought for years in the U.S. and outside of the U.S. to be able to classify their drivers as independent contractors. They’ve continually argued that many of the drivers themselves enjoy their flexibility, although there has been plenty of pushback from drivers who have said they’re underpaid and exploited.
In 2021, after $200 million was spent on various campaigns, a California Superior Court judge said Proposition 22 was unconstitutional and unenforceable. Drivers, along with the Service Employees International Union, said the rule prevented drivers from organizing and left them with no rights to proper workers’ compensation. At the time, an Uber spokesperson said, “We will appeal, and we expect to win.”
It turned out he was right. Today the 1st District Court of Appeal in California said it disagreed with that earlier ruling in a 63-page document. “Proposition 22 does not intrude on the Legislature’s workers’ compensation authority or violate the single-subject rule,” said the court. Soon after the announcement, Uber and Lyft and also DoorDash saw their stocks rise.
“Today’s ruling is a victory for app-based workers and the millions of Californians who voted for Prop 22,” Uber Chief Legal Officer Tony West said in a statement. “Across the state, drivers and couriers have said they are happy with Prop 22, which affords them new benefits while preserving the unique flexibility of app-based work.” Lyft and DoorDash were, of course, similarly rejoiceful in their statements.
The Service Employees International Union was less than impressed, saying, “Every California voter should be concerned about corporations’ growing influence in our democracy and their ability to spend millions of dollars to deceive voters and buy themselves laws.”
The battle is not yet over. Now the case could be taken to the Supreme Court, and though the Supreme Court may reject the appeal, considering the nature of this case, it will likely be taken up.