California Judge Says Uber and Lyft Drivers Are Employees, Not Contractors

A state court judge has determined that in California, Uber and Lyft cannot continue categorizing their drivers as contractors, and instead must categorize them as employees.

This decision was made in light of the state’s new law, Assembly Bill 5, which aims to expand job protections and benefits to many workers in the growing gig economy, CNN reported.

In this instance, the state of California brought forward allegations that Uber and Lyft were in violation of the law.

The decision was made by Superior Court Judge Ethan Schulman, who stated he was well aware the decision would be costly to ride-hailing companies and could pose problems for some drivers who rely on the flexibility afforded to them as contractors.

Despite these challenges, the judge stated Assembly Bill 5 must be upheld, and under the law, drivers should indeed be classified as employees.

He summarized this opinion, saying the companies “may not evade legislative mandates merely because their businesses are so large that they affect the lives of many thousands of people.”

In making this decision, the judge also declined a number of motions made by the ride-sharing companies as they attempted to fight the employee classification claims.

Uber had challenged the constitutionality of Assembly Bill 5 itself, and asked the judge not to rule until the Ninth Circuit had ruled on the constitutionality question. However, the judge declined to pause the Lyft and Uber employee ruling. 

The company had also asked that the judge not rule until Proposition 22 was voted on in the fall, a request that was also declined.

Proposition 22 is a ballot measure that would allow some companies to receive exceptions to the requirements made by Assembly Bill 5. According to the judge, these were not sufficient reasons to hold off on making a ruling on whether Uber drivers and Lyft drivers should be employees.

The proposition itself has been involved in the court system after its supporters were denied a chance to make changes to the proposition’s name and summary before the election, the San Francisco Chronicle reported. They have since appealed that decision.

The Uber driver and Lyft driver classification lawsuit was filed by California Attorney General Xavier Becerra and Los Angeles, San Diego and San Fransisco city attorneys, CNBC reported. They filed their complaint in May. They exercised a part of the new law that allows state attorney to file injunction to require that companies uphold the law and reclassify employees as needed.

Since the Uber driver and Lyft driver classification lawsuit was filed, Uber and Lyft have been fighting back.

Lyft argued that many drivers do not want to become employees, despite the benefits and protections offered to employees and not contractors. Lyft stated that the company plans to continue the fight, and will appeal the decision, saying the appeal was for their drivers, and voting to “continue to fight for their independence,” according to CNBC.

Uber echoed this sentiment, saying that many drivers choose to work with Uber and Lyft because the roles offer them independence.

In California, workers must be considered to be employees if they fulfill a number of requirements, such as performing work in such a way specified by their employers. Contractors, on the other hand, have more freedom in how and when they perform their work. 

However, there are many industries and roles in which this distinction becomes less clear. Proponents of Assembly Bill 5 say many companies take advantage of misclassification as  a way to get out of giving contractors benefits, even if they preform work as employees.

One of the ways in which the law aims to clarify this is to note that those who perform work within the scope of the central function of the business should likely be considered employees.

In the eyes of Judge Schulman, such is the case with Lyft and Uber drivers. He says their role as drivers is indeed central to Uber and Lyft’s business and functions.

The judge says that to classify them as contractors would be unlawful and would deny them the protections that they are due under the law.

In related legal news, the Ontario Superior Court in Canada may proceed to consider an Uber driver class action lawsuit, which alleges that Uber drivers are entitled to rights conferred on employees under that province’s Employment Standards Act. 

Have you ever been misclassified in your work? How did you handle the situation? Share your experiences with us in the comments below.

California is represented by the California Attorney General’s Office and the city attorneys for San Fransisco, Los Angeles and San Diego.

The Uber, Lyft Worker Classification Lawsuit is People of the State of California v. Uber Technolgies Inc., et al., Case No. CGC-20-584402, in the Superior Court for the State of California, County of San Fransisco. 

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This article is not legal advice. It is presented
for informational purposes only.