California court ruling gives voters last word over ride-sharing protections

Ride Hailing

A California appeals court avoided a shutdown of ride-hailing services Uber and Lyft in the state, effectively handing a decision over gig worker benefits and cover voters in a November ballot measure.

The companies had said they would be unable to comply with a new state law that would consider their drivers employees entitled to benefits like minimum wage, overtime and sick pay and unemployment insurance instead of independent contractors.

Thursday’s last-minute ruling, in a case with possible ripple effects across the global gig economy, means drivers can keep on working as independent contractors while the appeals courts consider the question of driver standing.

But the court, which has scheduled arguments in the case for October the 13th, is unlikely to rule before a November the 3rd ballot measure puts the decision into the hands of California voters.

Lyft, Uber, DoorDash, Instacart and Postmates are spending more than $110 million to support the ballot measure, called Proposition 22, that would enshrine motorists’ contractor status, albeit with some added benefits, and overwrite the state’s gig worker bill.

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Lyft Inc shares were up 5.7% after the ruling, and Uber Technologies Inc shares were up 6.7%.

The threat to suspend service in the most populous US state marked an unprecedented escalation in a long-running fight between regulators, labor groups and gig economy companies that have upended traditional employment models around the world.

“We are glad that the Court of Appeals recognised the important questions raised in this situation, and that access to these critical services won’t be cut off while we continue to urge for drivers’ ability to work with the freedom they want,” Uber said in a statement.

“While we won’t have to suspend operations tonight, we do need to continue fighting for independence plus benefits for drivers,” the company said in reference to the November ballot initiative.

The office for California Attorney General Xavier Becerra, who had sued the companies for not complying with the state’s gig worker law, didn’t immediately respond to a request for comment.

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The companies had sought the intervention of the California First District Court of Appeal in San Francisco to block an injunction order issued by a judge last week. That ruling forced the companies to treat their drivers as employees beginning Thursday after midnight.

THE THIRD WAY

Uber and Lyft say the vast majority of their drivers don’t wish to be employees, with some 80% working less than 20 hours per week. The companies say their flexible on-demand business model isn’t compatible with conventional employment legislation and advocate for what they call a “third way” between contractor and employment status.

Under the “third way” proposal outlined in the ballot measure, drivers would be given a healthcare stipend, a minimum wage, expense reimbursements as well as medical and disability coverage for injuries at work.

Labour groups reject the companies’ claims that current employment laws are not compatible with flexible work schedules and argue the companies should play by the same rules as other businesses. They say the companies’ ballot measure would create a new underclass of workers with fewer rights and protections.

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The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our content partners at Thomson Reuters. Reporting by Tina Bellon in New York. Editing by Steve Orlofsky and Tom Brown.

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