Ridesharing giants Uber and Lyft scored a critical legal victory on Monday after a California court ruled that gig companies can continue operating under an independent contractor model.
The ruling from the California appeals court overturned a lower-court ruling that said the ballot measure, known as Proposition 22, was illegal. Voters had passed the law in November 2020, though it was later challenged by some gig workers and labor unions. A judge ruled it unconstitutional in August 2021, saying it limited the state’s legislative power.
The move means that Uber and Lyft, as well as other companies with gig-centric business models, such as DoorDash and Instacart, can keep signing up drivers as independent contractors rather than employees. It allows the companies, which have begun focusing on reaching profitability, to avoid paying costs associated with employees, such as paid time off and health benefits.
The companies backing the bill had poured more than $205 million into the effort, according to Ballotpedia.
“Today’s ruling is a victory for app-based workers and the millions of Californians who voted for Prop. 22,” Tony West, Uber’s chief legal officer, said in a statement. “Across the state, drivers and couriers have said they are happy with Prop. 22, which affords them new benefits while preserving the unique flexibility of app-based work. We’re pleased that the Court respected the will of the people, and that Prop. 22 will remain in force.”
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