California Judge Rules Uber and Lyft Drivers are Now Employees

By: First Union | Date:

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California Judge Rules Uber and Lyft Drivers are Now Employees

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On Monday, Aug. 17, 2020, a California court ruled that Uber and Lyft must now classify their drivers as employees. The rideshare companies currently have ten days during which to appeal the ruling. Uber for its part is going to file an emergency appeal to try and stem the decision.

Both companies began in California and pretty much since the very beginning has been under pressure to make some changes where drivers and consequent employee status are concerned. Because their drivers are not currently seen as typical employees and are instead viewed as independent contractors, they do not receive traditional benefits as a company employee would.

Back in May, the California Attorney General as well as several LA city lawyers filed suit against Uber and Lyft stating that under the state's AB5 law, the drivers should be classified as employees versus independent contractors. AB5 is a law that uses the ABC test to determine whether or not someone is an employee. The California Superior Court explained it thusly: The defendants' drivers perform work which is within the normal course of business; the defendants' companies are also not multi-sided platforms, rather they are transportation companies. Plus, drivers are central to both companies' business models—not tangential. The Attorney General explained that drivers should not be paying for that which is the responsibility of the major company for which they work.

The state's labor commissioner also went after the two companies alleging that they were in essence stealing from drivers by not allowing them to be classified as employees. Various drivers' groups have also been going after both Uber and Lyft for the same reason. Members of the Mobile Workers Alliance are quite happy with the California ruling as they see it as a move toward progress in terms of driver rights.

Spokespeople for both companies argue that the majority of drivers do not want to have employee status, and as a result of this ruling, there will be fewer jobs which during a time of crisis could only cripple the economy even further. According to an Uber representative, the vast majority of drivers want to remain as independent contractors. They argue that with 3 million-plus Californians currently unemployed, the state should be focused on job creation versus trying to take down an industry.

On Lyft's end, they agree. They too plan to appeal the ruling asap. Lyft is confident that the California voters will ultimately have a hand in determining which direction this will go. If in fact, drivers do get employee status, the companies would then have to pay minimum wage as well as overtime, paid rest periods, and reimbursements as far as vehicle costs go. Currently, drivers do not get these things.

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