- by Annabelle Liang
- Business reporter
A US court has ruled that “gig” economy giants including Uber and Lyft can continue to treat their workers as independent contractors in California.
Labor groups and some workers opposed the measure, saying it took away rights such as sick leave.
The companies say the offer protects other benefits such as flexibility.
The latest ruling overturned a lower court decision in California in 2021 that found Proposition 22 affected lawmakers’ powers to set standards in the workplace.
The state of California and a group representing Uber, Lyft and other companies have appealed against the decision.
On Monday, a three-judge panel of the Court of Appeal ruled that the workers could be treated as independent contractors. However, he removed the clause, which was placing limits on workers’ collective bargaining, from Proposition 22.
Shares in Uber and Lyft are up nearly 5% in after-hours trading.
“Today’s ruling is a victory for the app workers and the millions of Californians who voted for Proposition 22,” said Tony West, Uber’s chief legal officer.
West added, “We are pleased that the court respected the will of the people and that Prop 22 will remain in place, while maintaining the independence of the drivers.”
Lyft said the proposal “protects the value of the engines of independence and gives them new and historic advantages.”
The Service Employees International Union, which challenged the constitutionality of Proposition 22 with multiple drivers, said it was considering appealing the court’s decision.
In November 2020, California voters passed Proposition 22 which allowed independent workers to be classified as independent contractors.
It was a victory for Uber and Lyft who ran a $205m (£168.7m) campaign to support the measure.
Some drivers supported Proposition 22 but other drivers and labor groups opposed it, citing all the benefits of being classified as employees including sick days, vacation and overtime pay.
Tens of millions of people work in the global gig economy across services such as food delivery and transportation.
Gig workers are paid for odd tasks, such as a food delivery or a car ride, rather than a regular wage.
Most US federal and state labor laws, such as those requiring minimum wage or overtime, do not apply to gig workers.
Companies like Uber and Lyft have come under increased scrutiny as the industry has grown in size.