The court’s reversal of the lower-court ruling could pave the way for Uber and Lyft drivers to receive increased benefits and protections from their employers. The case is still pending, so further proceedings are expected.
Many app-based companies rely on gig workers to ferry passengers and deliver meals, but do not have to offer the same benefits that an employer would like, such as sick leave and unemployment insurance. This decision by three appeals court judges is a win for these companies, as it allows them to avoid paying for these costs.
This ruling has ramifications not just in California, but also nationwide. If the court’s decision is upheld, it could set a precedent for other states to repeal unconstitutional laws and thus pave the way for more democratic decision-making.
With California’s decision to uphold the independent contractor model, it could compel other states to also keep this classification. This would be good for companies like Uber, DoorDash and Lyft, as all three saw share prices jump substantially in after-hours trading following the court decision.
Some people argue that Prop 22 is unconstitutional, because it restricts the rights of minorities. Others believe that the measure is necessary to prevent unions from taking advantage of workers. The battle over Prop 22 isn’t over yet, but in the meantime, Californians can continue to vote on it until a higher court decides whether or not to hear SEIU’s lawsuit.
Ultimately, Prop 22 passed in California thanks to the large number of ads run by the companies and their drivers. The measure provided flexibility for drivers as well as some benefits, though it is still unclear how exactly it will work in practice. As the law stands now, Uber and Lyft are still classed as employers, which means they must adhere to many of the same regulations as traditional businesses.
