Uber must make California drivers full employees, judge rules

Daniel Fowler
August 13, 2020

Following the order will require Uber and Lyft to provide benefits and unemployment insurance for workers.

"Drivers do not want to be employees, full stop", Lyft spokesperson Julie Wood said.

Khosrowshahi's comments are consistent to language in a motion filed Tuesday by Uber following the court's ruling. While the Lyft and ride-sharing rival Uber have struggled during the pandemic, Lyft CEO Logan Green said early third-quarter data showed signs of a potential turnaround in the coming weeks. The decision was stayed for 10 days as the companies prepare their appeals, and as CNBC reports, Khosrowshahi is saying that shutting down operations in California is his "Plan B" if the next appeal doesn't go in the company's favor.

On Monday, California Superior Court Judge Ethan Schulman granted a preliminary injunction forcing Uber and Lyft to reclassify its drivers as employees. Sacramento politicians and special interests keep pushing these disastrous laws and lawsuits that would take away the ability of app-based drivers to choose when and how they work, even though by a 4:1 margin drivers want and need to work independently.

This is just the latest turn in a years-long standoff between labor-friendly California and gig-economy companies, and it isn't the only legal drama that's played out in the last decade over the issue of whether app-based delivery or rideshare companies should be allowed to treat the majority of their workforce as independent contractors.

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The company argued that many turn to gig work as a temporary outlet when they lose their jobs or find themselves in adverse economic circumstances, and said 86 per cent of its drivers in California work less than 20 hours per week. Still, ridership has been down during the pandemic anyway, which the judge said made the injunction come at what is perhaps "the least worst time" for Uber and Lyft to adjust their business models.

Under California law, as of this year, companies are not permitted to classify workers that are part of a company's core business as contractors, without giving them benefits.

The order could have broad implications not only for ride-hailing but the tech industry which relies on gig work to stand up massive labour forces without providing them the traditional benefits of employment.

"Our state and workers shouldn't have to foot the bill when big businesses try to skip out on their responsibilities".

Uber and Lyft are supporting a measure on the November ballot in California classifying drivers as independent contractors. But Khosrowshahi says Uber would have no other choice. They've poured US$110 million into the effort, which is expected to be on the upcoming general election ballot.

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