In a landmark decision, California’s Supreme Court has upheld a voter-approved measure allowing app-based companies like Uber and Lyft to classify their drivers as independent contractors. This ruling is a significant win for the ride-hailing industry, which argued that reclassifying drivers as employees would force many companies to reduce or cease operations in the state.
The court’s decision came after a lawsuit from the Service Employees International Union (SEIU) and several drivers challenged the constitutionality of Proposition 22, a ballot measure passed in 2020. Proposition 22 maintains the independent contractor status of drivers while granting some benefits, such as minimum earnings guarantees and health insurance subsidies.
Uber welcomed the decision, emphasizing that it aligns with the wishes of nearly 10 million Californians who supported the measure. SEIU, while expressing disappointment, vowed to continue advocating for gig workers’ rights and protections, including potential unionization efforts.
The distinction between employees and independent contractors is crucial for the gig economy. Employees are entitled to benefits like minimum wage, overtime, and expense reimbursements, while independent contractors are not, which can significantly reduce costs for companies.
Prop 22, which passed with nearly 60% of the vote, allows drivers to work flexible hours while ensuring a minimum wage of 120% of the state minimum during active rides, along with other benefits. A previous state appeals court had already dismissed SEIU’s claim that Prop 22 unlawfully restricted legislative authority over the workers’ compensation system.
This ruling is part of a broader national debate over the classification of gig workers. Recent legislative actions in Minnesota and Massachusetts have also addressed the status and compensation of gig economy workers, highlighting the ongoing controversy and differing approaches across states.
