Status: 03/14/2023 10:57 am
A US appeals court has strengthened ride-hailing service providers such as Uber and Lyft in a recent ruling. They do not have to classify their drivers as employees.
US transportation service providers can continue to treat their employees in their vehicles as independent contractors. This was decided by an appeals court in the US state of California.
This confirmed a corresponding referendum in California from 2020 called Prop 22, according to which Uber, Lyft and other driving service providers define their drivers as self-employed. This exempts employers from certain obligations and social benefits.
Uber and Lyft are happy
The verdict is considered a success for Uber and Lyft: the shares of the two companies rose by almost five percent in after-hours trading in the US on Monday. “We are satisfied that the court respected the people’s wishes” and thus “protected the independence of drivers,” Uber legal chief Tony West told AFP.
The successful Prop 22 referendum was ruled unconstitutional by a court in August 2021. At the time, the judge ruled that only parliamentarians could legislate on wages. However, the Court of Appeals now ruled that Prop 22 “does not limit the authority of the legislature over the compensation of workers”.
Minimum wage and health care contributions
The rule stipulates that drivers are considered self-employed, but Uber and Lyft pay them a range of benefits, such as a minimum wage and contributions to health care and other insurance.
Those affected and unions now fear that large companies could rewrite US labor law. “We’re all stunned, angry and ready to keep fighting,” said Uber driver Nicole Moore, president of Rideshare Drivers United in California, a lobby group for Uber and Lyft drivers. The union that challenged Prop 22 could now go to the state Supreme Court, many of those affected are hoping. A final decision would then be made there.