California Court Hands Victory To Uber In Gig Worker Ruling

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A California appeals court gave Uber, Lyft and other companies that rely on an independent-contractor model a victory Monday.

Last year, a judge determined California’s Proposition 22, a ballot initiative approved by voters in November 2020 to allow companies to classify gig workers as independent contractors instead of employees, was in conflict with the state legislature’s power to create worker’ compensation laws, according to the Los Angeles Times. The appeals court overturned this ruling, finding the proposition could be upheld without undermining the legislature.

“We agree that Proposition 22 does not intrude on the Legislature’s workers’ compensation authority or violate the single-subject rule, but we conclude that the initiative’s definition of what constitutes an amendment violates separation of powers principles,” the court ruled.

The distinction between independent-contractor and employee matters because it frees companies like Uber, DoorDash, and Lyft from providing their drivers with overtime pay or employee benefits mandated by California worker laws. (RELATED: California And New York Compete For Who Can Lose More Residents)

SAN FRANCISCO, CALIFORNIA – MARCH 7: The Lyft logo is displayed on a car on March 7, 2019 in San Francisco, California. On-demand transportation company Lyft has filed paperwork for its initial public offering that is expected to value the company at up to $25 billion. (Photo by Justin Sullivan/Getty Images)

The court did strike down a portion of the proposition that prohibits lawmakers from adding amendments like allowing gig workers to unionize, according to Bloomberg Law. Though this section “violates separation of powers principles,” it  “can be severed from the rest of the initiative” while leaving the core intact.

“Proposition 22 contains a severability clause declaring that if any provision is held to be invalid, the remainder of the initiative shall remain valid,” the ruling notes.

Preposition 22 was the costliest ballot initiative in history, with over $220 million spent on campaigns, the LA Times reported. It passed with 58% in favor and 42% of voters opposed, overruling a law passed by the state legislature in 2019, AB 5, which forced companies to classify independent contractors as employees.

Lyft said it is “pleased that the court upheld the democratic will of the voters and the fundamentals of Prop 22” in a statement provided to the Daily Caller News Foundation.

“Prop 22 protects the independence drivers value and gives them new, historic benefits,” Lyft said. “After Prop 22 went into effect, more than 88% of California drivers surveyed said that it has been good for them. We are excited to continue operating our service with no changes.”

Uber did not immediately respond to a request for comment.

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