A court in the US has ruled that workers for Uber and Lyft are considered contractors

A recent ruling by a US appeals court has permitted ride-hailing giants like Uber and Lyft to continue to classify their workers as independent contractors in California. The ruling found that Proposition 22, a labour measure passed in California, was mostly constitutional.

Opponents of the measure, including labour groups and some workers, have claimed that it deprives workers of benefits such as sick leave.

However, the companies maintain that it provides workers with flexibility.

The latest ruling overturns a previous decision by a lower court in California in 2021, which argued that Proposition 22 impeded lawmakers’ ability to establish workplace standards.

Both the state of California and a group representing Uber, Lyft, and other firms contested the decision.

The appeals court’s three-judge panel ruled that workers could be classified as independent contractors, but they removed a provision from Proposition 22 that placed limitations on collective bargaining by workers.

After-hours trading saw shares in Uber and Lyft increase by nearly 5%.

“Today’s ruling is a victory for app-based workers and millions of Californians who voted for Prop 22,” Tony West, chief legal officer at Uber said.

“We’re pleased that the court respected the will of the people and that Prop 22 will remain in place, preserving independence for drivers,” Mr West added.

Lyft said that the proposition “protects the independence drivers value and gives them new, historic benefits.”

The Service Employees International Union is contemplating appealing against the court’s ruling, which upheld the constitutionality of Proposition 22 and allowed Uber and Lyft to continue treating their workers as independent contractors in California.

Proposition 22, which passed in California in November 2020, allowed independent contractors to be classified as freelance workers, a win for ride-hailing giants Uber and Lyft, who spent $205 million campaigning for the measure.

However, the companies were required to offer some benefits to workers, such as healthcare and accident insurance. While some drivers supported the measure, others and labor groups opposed it, citing the benefits of being classified as employees, such as sick leave and overtime pay.

Gig workers, who are paid for individual tasks rather than receiving a regular wage, make up tens of millions of people in the global gig economy, including in food delivery and transportation.

However, most US federal and state labor laws, such as those requiring minimum wage or overtime pay, do not apply to gig workers, leading to increased scrutiny of companies like Uber and Lyft as the industry expands.

The Service Employees International Union, which challenged the constitutionality of Proposition 22 with several drivers, is considering appealing the court’s recent decision.