Legal ruling could force ride-share giants to abandon their use of independent contractors in the state.
A judge has ordered ride-hailing giants Uber and Lyft to treat their California drivers as employees instead of independent contractors, a shift that would guarantee benefits like overtime, sick leave and expense reimbursement for workers who make up much of the freewheeling gig economy. But the ruling from San Francisco Superior Court Judge Ethan P. Schulman won’t take effect right away as both Uber and Lyft said this week they will immediately appeal to a higher court, which could put the ruling on hold. Still, advocates praised the ruling as a milestone in their fight to apply traditional worker protections to a fast-growing segment of the labor force. Uber and Lyft criticized the decision, saying it threatens to shut them down during a pandemic-induced economic downturn where many people who have lost their jobs turn to the ride-hailing companies to earn money. « Our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression, » Uber spokesperson Davis White said. Analysts expect Uber and Lyft to lose the legal battle on driver classification because the law is designed specifically to snare ride-hailing companies. If Uber and Lyft file an appeal and eventually lose, they would have to scramble to comply with the law, Chase White of Height Securities told investors in a research note.
