California Judge Rules Uber and Lyft to Immediately Classify Drivers as Employees

A California court issued a preliminary injuction on Monday, ordering Uber and Lyft to immediately reclassify Uber and Lyft ride-share drivers as employees, in a highly anticipated decision that follows a months-long battle between the state of California and the gig economy companies.

The San Francisco Superior Court judge said the companies must begin complying within 10 days.

In May, California’s attorney general Xavier Becerra, alongside the cities of San Francisco, Los Angeles, and San Diego, sued Uber and Lyft, arguing that the companies have been violating law by misclassifying Uber and Lyft drivers as independent contractors since January 1 when a state law known as AB5 went into effect.

In June, Becerra filed a request for a preliminary injunction, arguing that drivers are currently enduring such significant damages that waiting until the end of litigation would cause irreparable harm.

Responding to news of the preliminary injunction, attorney general Becerra said, “The court has weighed in and agreed: Uber and Lyft need to put a stop to unlawful misclassification of their drivers while our litigation continues. While this fight still has a long way to go, we’re pushing ahead to make sure the people of California get the workplace protections they deserve.”

As independent contractors, Uber and Lyft drivers do not receive basic labor protections such as a minimum wage, overtime pay, paid sick days, medical insurance, and unemployment insurance, and compensation for accidents incurred on the job.

In response to the court order, a spokesperson for Uber told Motherboard: “The court’s ruling is stayed for a minimum of 10 days, and we plan to file an immediate emergency appeal on behalf of California drivers. The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law. When over 3 million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression.”

“Drivers do not want to be employees, full stop,” a Lyft spokesperson told Motherboard in response to the news. “We’ll immediately appeal this ruling and continue to fight for their independence. Ultimately, we believe this issue will be decided by California voters and that they will side with drivers.” 

On August 6, hundreds of rideshare drivers in cars decorated with banners, flags, and signs, descended on Lyft and Uber hubs in downtown Los Angeles and Oakland, in anticipation of the hearing on the preliminary injunction, and to protest a November ballot initiative, known as Proposition 22, funded by the gig economy companies in California, which would exempt them from reclassifying drivers as employees.

“We are waking up and saying ‘hey it’s about time we get our rights,” Hector Castellanos, a Uber and Lyft driver and organizer with We Drive Progress, who rallied at an Uber hub in Oakland on Thursday, told Motherboard. “I had an accident in 2017 and wasn’t able to walk for 8 months, but did not receive any benefits from Uber or Lyft. But as employees, we don’t have to wait for access to those benefits.”

On August 5, while Uber and Lyft drivers protested and caravanned in several major California cities, the state’s labor commissioner announced a lawsuit against Uber and Lyft, alleging that the companies have committed wage theft by misclassifying drivers as independent contractors.

The state’s labor commissioner has received nearly 5,000 wage theft claims from drivers, and has sued to recover all of the wages owed to drivers, as well as costs incurred from other legal violations and damages.

Both lawsuits have the similar intended purpose of forcing Uber and Lyft to abide by the law, which was intended to provide greater protections to vulnerable gig workers.

Uber and Lyft have spent a collective $90 million on their campaign to pass the Proposition 22 ballot initiative, which would undo the effects of AB5. A UC Berkeley Labor Center Analysis found that the ballot initiative would drive down drivers’ earnings to $5.64 an hour, $9 less than California’s minimum wage.

“Next month, I turn 60. I want sick days, health insurance, and overtime pay, but they want to take that away,” Mike Robinson, a Lyft driver and organizer with the group Mobile Drivers Alliance, who rallied outside the Lyft hub in Los Angeles, on August 6, told Motherboard.

Uber and Lyft have argued that the attorney general’s lawsuit is an attempt to shut down rideshare companies in California, and if the court rules on the side of the state, hundreds of thousands of drivers could lose their jobs and customers could see prices rise.

This article has been updated to include statements from Uber, Lyft, and California attorney general Xavier Becerra.