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Uber and Lyft experience a setback in a California court

Ride-hailing companies Uber and Lyft continue to remain locked in a legal battle with the California legislature. A court recently ruled against the two companies, so Uber and Lyft face orders to alter their workers’ status to employees. The companies intend to appeal the ruling.

California passed Assembly Bill 5, a law that seeks to address workers’ misclassifications. Uber and Lyft, along with many other companies, pay workers as independent contractors as opposed to employees. The California legislature tightened the classification of independent contractors. Uber and Lyft filed litigation to keep workers listed as independent contractors instead of employees.

If drivers receive reclassification as employees, they would be eligible for minimum wage, overtime, workers’ compensation and more. Uber and Lyft state that the overwhelming majority of their workers prefer the independent arrangement. The court appears to find such an argument immaterial to the state’s law. To classify as an independent contractor, the worker must perform duties “outside the usual course” of business.

Uber and Lyft have 10 days from the initial ruling to file an appeal. Both companies suggested they may cease operations in California, leaving 200,000 affiliated ride-hailing drivers unemployed. Uber and Lyft pointed out that operating costs necessitate such a decision.

An initiative will appear on the 2020 November ballot, so Uber and Lyft may want to leave the answer to voters. Some individuals might vote in the companies’ favor if they do not wish to lose access to the service or pay higher fees. Whether these voters turn out to be a majority won’t be known until after the election.

A workers’ compensation claim may arise after someone is injured on the job. When driving for a ride-hailing company, there are many ways a driver could suffer an injury. Independent contractors are self-employed and do not have access to workers’ compensation, so the outcome of this case may affect drivers’ eligibility for a claim.