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The decision to uphold Proposition 22 is being marked as a win for companies like Uber and Lyft, which have campaigned to keep their gig workers listed as independent contractors.
A California appeals court has upheld an earlier labour measure that workers in the gig economy – including Uber and Lyft drivers – can remain classified as independent contractors.
The verdict means these gig workers are exempt from certain labour laws that oblige typical employee benefits such as health insurance and minimum wage requirements.
The decision means most elements of Proposition 22 remains in effect. This was introduced in 2020 after a lengthy lobbying campaign and means app-based drivers can continue being treated as independent contractors.
In 2021, a California court deemed Proposition 22 as unconstitutional, but the latest appeal has reversed that lower court ruling. This biggest change that was made was to remove a provision that limited the ability of gig workers to join unions, Reuters reports.
The decision of the appeals court is a win for companies such as Uber and Lyft, as it means that app-based drivers will be exempt from California’s AB-5 law, which was introduced in 2020.
The aim of AB-5 was to provide gig workers with better wages and benefits by reclassifying them as employees rather than contractors.
The retained Proposition 22 exemption means that companies will not be obliged to provide gig workers with typical employee benefits such as health insurance or access to a minimum wage.
Companies including Uber, Lyft and Doordash spent hundreds of millions campaigning in favour of Proposition 22 before it passed in 2020, arguing that those using their platforms to earn a living were reliant on the flexibility of an independent contractor model.
In 2020, Uber also claimed that it would have to shut down its business in California temporarily to implement the changes under AB-5.
While companies such as Uber have scored a victory in the US, the same can’t be said in the EU. In 2021, the UK’s supreme court ruled against Uber, stating that the company’s drivers should be classified as workers and not independent contractors.
In the supreme court’s ruling, it considered several elements and found that Uber was in enough control of its drivers that they could be classed as workers rather than contractors.
The court said that Uber set the contract terms, dictated how much drivers earn because it sets the fares, could penalise drivers if they rejected too many rides, and monitored drivers’ service.
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