Appeals court backs ruling that Uber, Lyft should treat drivers as employees

Uber and Lyft's loss won't change things immediately, but the vote on Proposition 22 is more important than ever.

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LAX AIRPORT, CA - AUGUST 20:          Passengers connect with drivers at the Rideshare Lot at LAX as Uber and Lyft drivers held a moving rally as part of a statewide day of action to demand that both ride-hailing companies follow California law and grant drivers basic employee rights and to denounce the corporations efforts to avoid their responsibilities to workers. Uber and Lyft threatened to suspend services in California Thursday night but a court granted Uber and Left a stay to a preliminary injunction requiring both rideshare companies to reclassify their drivers as employees, meaning the rideshare companies will not suspend service in California tonight as they threatened.   Los Angeles on Thursday, Aug. 20, 2020 in LAX Airport, CA. (Al Seib / Los Angeles Times
Al Seib via Getty Images

Uber and Lyft lost in court in Thursday, as the First Appellate District court in San Francisco affirmed a preliminary injunction placed against the companies last month. That ruling said there’s “overwhelming likelihood” the two companies are misclassifying their drivers as contractors instead of employees under the state’s AB5 law.

However, for the time being this won’t change much. As NBC News notes, the ruling will be put on hold for at least 60 days, and the companies can potentially appeal to the California Supreme Court. That would put them beyond a vote in November on the Proposition 22 ballot measure backed by Uber and Lyft. If it passes, it would exempt them from AB5, and put into place measures that could make it nearly impossible to roll back.

In a statement, San Francisco city attorney Dennis Herrera said “This decision makes it abundantly clear that Uber and Lyft have been breaking the law for years. The only thing ‘radical’ and ‘unprecedented’ is the scope of Uber and Lyft’s misconduct. This is a victory for the people of California and for every driver who has been denied fair wages, paid sick days, and other benefits by these companies...The law is clear: Drivers can continue to have all of the flexibility they currently enjoy while getting the rights they deserve as employees. The only thing preventing that is Uber and Lyft’s greed.”

The companies claim that if forced to comply with AB5, it would force many drivers out of work. Uber CEO Dara Khosrowshahi wrote on the company’s website this week that “According to our research, if Uber instead employed drivers, we would have only 260,000 available full-time roles—and therefore 926,000 drivers would no longer be able to work on Uber going forward.”

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Appeals court backs ruling that Uber, Lyft should treat drivers as employees