California court lets gig companies keep treating workers as contractors

Gig companies like Uber and Lyft can continue classifying app-dispatched workers in California as independent contractors after a court largely ruled in the companies favor.

The Monday decision from California’s First District Court of Appeals vindicates tech companies and undercuts organized labor foes who challenged an industry ballot initiative exempting the firms from a sweeping new labor law. Judges reversed most of a lower court decision that had invalidated Proposition 22 in its entirety.

“Today’s ruling is a historic victory for the nearly 1.4 million drivers who rely on the independence and flexibility of app-based work to earn income, and for the integrity of California’s initiative system,” the Protect App-Based Drivers + Services coalition said in a statement.

But the ruling could still hand a significant victory to unions and worker advocates. It invalidated a provision of Prop 22 that sets a high bar for the Legislature to pass laws allowing workers to organize.

“We are grateful that the California Court of Appeal has affirmed that companies like Uber, Lyft, Doordash and Instacart can’t keep drivers from joining together in a union through their deceptive ballot measure,” plaintiff and driver Mike Robinson said in a statement.

The legal battle has extended a long-running fight over the status of gig workers in California. In 2019, the state passed a law that made effectively compelled companies to classify their workers as employees, not contractors, by enshrining a California Supreme Court Decision.

After failing to block the law in Sacramento, tech companies fought back at the ballot box by pouring hundreds of millions of dollars into passing Prop 22. A labor-backed coalition then challenged the law as unconstitutional.