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Uber and lift drivers must be redeployed as employees, the Court of Appeal found

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The ruling marks a significant development in a month-long legal battle between the companies and the state of California, which filed a lawsuit against Uber and Lift in May. They claimed it was a violation of state law. This puts more pressure on companies to successfully cross their California Ballot size It tries to exclude them from the law.

The state argued that by classifying their drivers as contractors, Uber was losing benefits to lift workers under a law that went into effect Jan. 1. A law known as Assembly Bill 5 or AB-5 allows companies to treat their workers as independent contractors only if they work outside the company’s core business free from company control.

A re-notification of their workers would represent a radical change that would be mandatory for both businesses, treating them as independent contractors building large ships of drivers and not providing employees with benefits such as minimum wages and overtime. , Paid sick leave, unemployment insurance.

In August, a court in California ordered Uber and Lift to redeploy their drivers to the state, which gave the state a victory. At the time, both companies Had threatened to shut down If they are forced to reclassify their workers.

The ruling prompted the companies to appeal. But Associate Justice John Streeter of the Court of Appeals wrote in his decision Thursday that it was valid to bar Uber and Lift from classifying their drivers as independent contractors.

“It is broad in scope, no doubt, but also the extent of alleged violations,” he wrote.

“Uber and Lift used their muscles and influence to prevent their drivers from being treated as workers deserving of payroll and benefit protection,” Attorney General Xavier Beckra said in a statement after the verdict. “It’s time for Uber and Lift to play by the rules.”

The change will not happen immediately. Uber and Lift still have 30 days to comply with California law Once the appeal process is complete. That clock begins 61 days after the Court of Appeals transferred the jurisdiction to the trial court, assuming that the opinion is not challenged. It is not clear whether the appeal and lift will appeal in Thursday’s California Supreme Court ruling, and Uber said in a statement to CNN Business that “we are considering our appeal options.”
The November election will make that court process more attractive. Uber (UBER) And Raise (Lift) – with delivery services used by drivers such as Dordash, Instacart and Uber-owned Postmates – $ 188 million to the California Ballot Project Proposition 22 aims to seduce AB-5 law.
If Prop 22 is passed, ride-hail and delivery drivers will be treated as independent contractors. There will be some exemptions for benefits including A Low income Guarantee based on “engagement time” when a driver fulfills a ride or delivery request, but not the time they wait for a gig.

“This ruling makes it more urgent for voters to stand with drivers and vote yes to Prop 22 than ever before,” Lift spokeswoman Julie Wood said in a statement to CNN Business on Thursday.

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If the measure is not passed, it will “prevent ride-share drivers from remaining independent contractors, lay off millions of Californians and stop ride-sharing,” Uber said in a statement. In many parts of the state.

The CEOs of both companies told the California Court of Appeals last month that they planned to comply with the law if Prop 22 fails to comply with a lower court order.

But compliance will “at least require fundamental changes to Uber’s platform.” Wrote Uber CEO Dara Khosroshahi. He said the change would dramatically limit the number of drivers Uber could hire, among other moves.

Lift CEO Logan Green wrote that such an implementation could include the cessation of ride-sharing activities in all or some parts of California.

– Jean Disease contributed to this report.

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