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California judge orders Uber, Lyft to classify drivers as employees

A preliminary injunction seeks to bring the companies into compliance with the state’s new law

Photo (c) Anatoliy Sizov - Getty Images
On Monday, a California judge ordered Uber and Lyft to classify their workers as employees rather than independent contractors. Superior Court Judge Ethan Schulman said the order will bring the ride-hailing companies in line with California’s new Gig Economy Law, provided it makes it through the appeals process. 

The judge said Lyft and Uber's contract drivers should be extended the same protections and benefits that the companies’ full-time employees, such as tech workers, receive.

"Were this reasoning to be accepted, the rapidly expanding majority of industries that rely heavily on technology could with impunity deprive legions of workers of the basic protections afforded to employees by state labor and employment laws," Schulman wrote.

Reclassifying drivers

Uber CEO Dara Khosrowshahi is currently fighting a lawsuit filed in May by California Attorney General Xavier Becerra which claims that Uber is illegally withholding crucial benefits from its workers by classifying them as contractors rather than employees. 

Becerra said the judge's preliminary order was a victory for drivers. 

"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. "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."

Uber CEO fighting the state law

On Monday, Khosrowshahi wrote an op-ed published in the New York Times that outlines a potential “third way” to classify gig workers. He proposed having gig companies establish a benefits fund that contractors could use for needs like paid time off or health insurance. The amount of money they could take out of the fund would depend on how many hours they’ve worked. 

Khowrowshahi says this plan would enable contractors to keep their flexibility but receive crucial benefits formerly extended only to employees. 

“I’m proposing that gig economy companies be required to establish benefits funds which give workers cash that they can use for the benefits they want, like health insurance or paid time off. Independent workers in any state that passes this law could take money out for every hour of work they put in. All gig companies would be required to participate, so that workers can build up benefits even if they switch between apps,” Khosrowshahi wrote. 

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