Uber and Lyft lost a court battle on Thursday and must classify their drivers in California as employees who are due benefits and labor protections.
Under the ruling by California’s court of appeals, the companies must comply within 30 days.
But in the Nov. 3 election, California voters will decide on Proposition 22, which could exempt Uber, Lyft and others from the state law that mandates their drivers be employees, not contractors.
California’s AB5 law, which went into effect earlier this year, requires gig-economy companies to reclassify many of their workers as employees, rather than independent contractors. As employees, the car-service drivers are entitled to benefits and protections like a minimum wage, health insurance, overtime pay, sick leave and the right to form a union.
“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,” said San Francisco city attorney Dennis Herrera, whose office was a plaintiff in the case. “For too long Uber and Lyft have illegally denied their drivers basic workplace protections.”
A Lyft spokesperson said this ruling made it “more urgent than ever” for their campaign to pass Prop. 22 — which Lyft, Uber and others have put nearly $200 million behind. The company said there would be no change in operations for now, as they await the result of the vote.
Uber, which did not immediately respond to HuffPost’s request for comment, told The New York Times it was “considering our appeal options.”
In Thursday’s ruling, the appellate judges shut down Uber and Lyft’s argument that they are tech companies and not transportation companies. “Uber and Lyft’s position that they are not in the transportation business is frivolous,” the ruling read.
Uber and Lyft also argued that drivers are not their employees because the companies provide a service to them through their “platform” that connects them to riders. The appellate court also rejected that notion: “The drivers provide the services necessary for defendants’ businesses to prosper.”
Uber and Lyft have fought tooth and nail against AB5′s requirements, given that converting drivers to employees with benefits would come with a hefty price tag.
After the August ruling that Uber and Lyft had to obey AB5 and classify their drivers as employees, the companies threatened to shut down operations in the state.
Gig Workers Rising, a group of ride-hailing drivers and other app-based workers who have been advocating for better working conditions, slammed the shutdown threat as “leaving drivers for dead in the middle of a pandemic, with no safety net.”
Along with hundreds of thousands of drivers, millions of passengers who rely on their services would be affected if Uber and Lyft decide at some point to suspend services.