Judge rules Uber, Lyft must classify drivers as employees

A California judge on Monday ruled that Uber and Lyft must classify their drivers as full employees rather than independent contractors, a ruling that if upheld could represent a significant loss for the ride-hailing giants.

The San Francisco Superior Court judge is giving the companies a 10-day window to file appeals before the injunction takes effect, and spokespeople for both told The Hill they will be doing so.

The case forcing Uber and Lyft to comply with AB5, a landmark law requiring a company to classify its workers as full employees if the firm has control over how they perform tasks or if the tasks are a routine part of the company’s core business, was brought by California Attorney General Xavier Becerra and a group of city attorneys.

“Our state and workers shouldn’t have to foot the bill when big businesses try to skip out on their responsibilities,” Becerra said in a statement to The Hill on Monday. “We’re going to keep working to make sure Uber and Lyft play by the rules.”

In his decision, Judge Ethan Schulman agreed with Becerra’s case that both Uber and Lyft were violating AB5 by continuing to classify drivers as contractors.

“It’s this simple,” he wrote in his ruling, “Defendants’ drivers do not perform work that is ‘outside the usual course’ of their business. Defendants’ insistence that their businesses are ‘multi-sided platforms’ rather than transportation companies is flatly inconsistent with the statutory provisions that govern their businesses as transportation network companies, which are defined as companies that ‘engage in the transportation of persons by motor vehicle for compensation.’”

Veena Dubal, associate professor of law at the University of California, Hastings called the decision “incredible, probably the most important one that has come out globally.”

“California is such a huge market for them, and… the judge made such clear legal statements about how this is not a technology company but a transportation company and they are clearly in violation of the law,” she told The Hill. 

Both Uber and Lyft have resisted the law since it went into effect this January, arguing that their core business is technology platforms rather than ride-hailing.

If their appeals ultimately fail, both companies could have to provide drivers with basic labor rights such as overtime pay and health insurance that they are not currently entitled to.

Attorneys for Uber and Lyft argued in court last week that such additional operating costs would tank their businesses.

Both companies have been hit hard by the coronavirus pandemic as demand for rides has cratered.

A spokesperson for Uber told The Hill that changes to the app — such as allowing drivers to set their own rates — have already been made to comply with California’s law.

“When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression,” the spokesperson added.

A spokesperson for Lyft went a step further, claiming that “drivers do not want to be employees, full stop.”

Hundreds of drivers for both apps in recent weeks have staged protests across California against the ballot measure backed by Uber, Lyft and DoorDash slated to appear on ballots this November.

Prop 22 would exempt gig companies from AB5. Its supporters argue that giving drivers protections as full employees would take away their flexibility.

“If the pandemic has shown anything, it’s that all workers deserve affordable health insurance, paid sick leave, a minimum wage, overtime pay, and access to a social safety net,” Mekela Edwards, an Uber driver and member of workers group We Drive Progress, said in statement after the decision.

“Still, we know Uber and Lyft will not give up on trying to deny us our rights. Rest assured, we will continue our fight for fair treatment and a livable wage by defeating Prop 22,” Edwards added.