On August 10, 2020, San Francisco Superior Court Judge Ethan Schulman ordered Uber and Lyft to reclassify its drivers from independent contractors to employees. Meaning, California drivers could be entitled to employee benefits like health care, sick leave, and overtime.
Monday’s order comes after California Attorney General
Xavier Becerra and a coalition of city attorneys filed for a preliminary
injunction to force the two ride-hailing companies to comply with California
Labor Law A.B. 5. A.B. 5 went into effect in January 2020 and codified the “ABC
test” from the California Supreme Court’s ruling in Dynamex Operations West,
Inc. v. Superior Court. Under this test, companies must prove that their
workers are free from company control and perform work outside the usual course
of the company’s business in order to classify workers as independent
contractors rather than employees.
The injunction was requested as part of a lawsuit
filed in May that alleges the companies are misclassifying their workers in
violation of the law. Uber and Lyft requested to stay litigation pending a
constitutional challenge to A.B. 5. The companies also asked the judge to hold
off on making any decisions pending the outcome of an initiative on the
November ballot that would exempt transportation network companies from the
bill’s requirements.
In granting the preliminary injunction, the court
reasoned that Uber and Lyft drivers are not performing work outside the normal
scope of the companies’ business. Judge Schulman was not persuaded by Uber and
Lyft’s insistence that they are not in the business of transporting passengers,
but rather are “multi-sided platforms” that operate as “matchmakers” to
facilitate transactions between drivers and passengers. The judge recognized
that drivers are central to Uber and Lyft’s transportation business, and thus
cannot be considered merely independent contractors.
California Attorney General Xavier Becerra called
the judge's preliminary order a victory for drivers. San Francisco City
Attorney Dennis Herrera said, “Uber and Lyft’s long history of flouting the law
is over,” while San Diego City Attorney Mara Elliott called the decision “a
milestone in protecting workers and their families from exploitation.”
