California State Supreme Court Rules in Favor of Gig-Economy & Contractors

In an important decision for the gig-economy business model, the California State Supreme Court handed Uber, Lyft and others a win with a ruling to treat drivers as contractors on Thursday, July 25. According to an article from the Wall Street Journal (WSJ) …

“Uber Technologies, Lyft and other companies that depend on gig workers scored a victory with California’s top court, affirming their independent-contractor model in the state, a decision that caps a yearslong legal battle over how their drivers should be classified.

California’s Supreme Court upheld a lower court ruling that said Proposition 22, a 2020 ballot measure that allowed the companies to continue classifying their drivers as gig workers, was constitutional. Some ride-share drivers and a labor union had challenged that decision, leading to a prolonged legal fight that wound up in the state’s highest court.

Uber and others are in a global tug of war with regulators over whether and how to grant more benefits such as paid sick leave and health insurance to workers in the so-called gig economy, where apps distribute individual tasks to a pool of people whom companies generally regard as independent contractors.

California sued Uber and Lyft in 2020, saying they were in violation of a new state law that sought to reclassify their drivers as employees who would be eligible for such benefits.

Uber, Lyft and gig-labor-dependent companies DoorDash and Instacart proposed a ballot measure to let state voters decide whether the law should apply to them. They promised workers flexibility alongside some benefits if the ballot measure passed. State voters passed it with an overwhelming majority.”