Major 'milestone' for workers as California judge rules Uber and Lyft must classify drivers as employees

"This is a resounding victory for thousands of Uber and Lyft drivers who are working hard—and, in this pandemic, incurring risk every day—to provide for their families."

In a move that local political leaders and labor rights advocates celebrated as a major win for gig workers, a California judge ruled Monday that the ride-hailing companies Lyft and Uber must classify drivers in the state as employees rather than independent contractors to comply with state law.

"The years-long ploy of these behemoth corporations to stall, obfuscate, and flat-out break the law has failed. There must be no more delays."

—Art Pulaski, California Labor Federation

San Francisco Superior Court Judge Ethan Schulman's decision (pdf) came in a case filed against Lyft and Uber in May by California Attorney General Xavier Becerra and the city attorneys of Los Angeles, San Diego, and San Francisco, who accused the companies of violating Assembly Bill 5 (AB 5), which Democratic Gov. Gavin Newsom signed last year.

"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," Becerra said in a statement responding to Schulman's preliminary injunction, which is stayed for 10 days to allow for legal appeals.

"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," Becerra added. "Our state and workers shouldn't have to foot the bill when big businesses try to skip out on their responsibilities. We're going to keep working to make sure Uber and Lyft play by the rules."

If the ride-hailing companies are forced to permanently reclassify drivers under AB 5—which went into effect at the start of this year—they could be required to provide workers with protections and benefits including minimum wage, overtime, paid sick leave, disability, healthcare, and unemployment insurance.

Becerra and the city attorneys filed suit after facing mounting pressure from Lyft and Uber drivers that increased in the midst up Covid-19 pandemic, which led drivers to endure plummeting incomes due to declining demand and greater health risks related to their work.

"This is a resounding victory for thousands of Uber and Lyft drivers who are working hard—and, in this pandemic, incurring risk every day—to provide for their families," Los Angeles City Attorney Mike Feuer said of Schulman's ruling. "Of course, our fight is not over and we will vigorously pursue this litigation until these workers have the permanent protection they deserve."

San Diego City Attorney Mara W. Elliott called the judge's decision "a milestone in protecting workers and their families from exploitation by Uber and Lyft."

"I'm proud to be in this fight to hold greedy billion-dollar corporations accountable, especially when a pandemic makes their withholding of healthcare and unemployment benefits all the more burdensome on taxpayers," Elliott added.

The news was also welcomed in a statement from Art Pulaski, executive secretary-treasurer of the California Labor Federation, which has championed AB 5.

"The years-long ploy of these behemoth corporations to stall, obfuscate, and flat-out break the law has failed," Pulaski said. "There must be no more delays. We demand these companies immediately adhere to this ruling and provide their drivers with the protections and benefits they so richly deserve."

Lyft and Uber are expected to continue fighting against AB 5's classification requirements under the guise of proving flexibility to drivers—even though, as San Francisco City Attorney Dennis Herrera explained Monday, "there is no rule that prevents these drivers from continuing to have all of the flexibility they currently enjoy. Being properly classified as an employee doesn't change that."

Uber spokesperson Davis White said in a statement that "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."

Lyft spokesperson Julie Wood claimed that "drivers do not want to be employees, full stop." She said that the ride-hailing giant will "immediately appeal this ruling" and, in an apparent reference to a state ballot measure backed by companies that employ gig workers, "we believe this issue will be decided by California voters and that they will side with drivers."

DoorDash, Lyft, and Uber have each poured at least $30 million into the ballot initiative, "with additional support from Instacart and Postmates, which Uber recently agreed to acquire," CNN Businessreported Monday. "If passed, it would exempt them from the AB 5 law, but offer drivers some benefits."

CNN pointed out that the judge's ruling comes after the California Labor Commissioner's Office last week "filed lawsuits against Uber and Lyft for allegedly committing wage theft by misclassifying their on-demand workers as independent contractors instead of employees."

The companies are also facing off against similar efforts at a national level. Bloombergnoted that "legislation passed by the Democratic-controlled U.S. House in February, and backed by presumptive Democratic presidential nominee Joe Biden, would apply a standard like California's to federal labor law."