Appeals court rules that Uber and Lyft must classify drivers as employees

For months, Uber and Lyft have been fighting the state of California over whether they must classify their workers as employees rather than as independent contractors. An October 23rd appeals court ruling sided with California, which wants drivers working for app-based services to receive employee benefits. The ruling upheld an August court decision, which also favored requiring Uber and Lyft to classify their drivers as employees.

Independent contractors vs. employees: What’s the difference?

Uber and Lyft drivers, and other app-based drivers, have historically been classified as independent contractors by ride sharing apps. As a result, the drivers are not eligible for certain legal protections including:

• Minimum wage
• Overtime
• Paid sick leave
• Unemployment
• Worker’s compensation

However, on November 3rd, California voters passed Proposition 22, which allows Uber, Lyft, DoorDash, Instacart, and Postmates to continue to classify their drivers as independent contractors. Despite this, the companies must guarantee that drivers receive at least 120% of the minimum wage for time they are fulfilling customer requests.

What prompted this worker’s rights battle?

This legal battle began after California passed the AB-5 law in January. The AB-5 law narrowed the scope of when workers could be considered independent contractors. AB-5 affected about 2 million independent contractors in California, including freelance writers, photographers, videographers, IT specialists and more.

The Golden State’s push to broaden worker benefits may spur other states to consider the same as the economy improves. However, other states may be careful, as many independent contractors in California aren’t happy about AB-5. Its restrictions have cost them work and forced businesses to rely on only their employees for needed work.