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.”
The preliminary injunction ordering the companies to reclassify their driver’s will go into effect 10 days after the ruling. Uber and Lyft have stated that they will appeal