California appeals court rules workers at gig-based companies are contractors, not employees

by ian

Ian Patrick, FISM News

On Monday, a California appeals court ruled that people who work for gig-based companies like Uber, Lyft, and DoorDash should be considered independent contractors instead of employees.

The ruling was a huge win for the companies. Shares of both Uber and Lyft rose shortly after the decision was announced.

As first reported by The Wall Street Journal, Monday’s ruling effectively overturns a previous ruling which had declared a proposition voted in by California residents as unconstitutional.

In August 2021, superior court judge Frank Roesch ruled against Proposition 22. According to reporting by TechCrunch, Prop 22 is a “ballot measure passed in November 2020 that classified Uber and Lyft drivers as independent contractors rather than employees.”

In his ruling at the time, Roesch said Prop 22 was “unconstitutional” and limited the legislature’s ability to do its job. The companies promptly appealed that ruling.

The fight over Prop 22 will continue, however, as the Services Employees International Union (SEIU) is expected to appeal Monday’s decision to the California Supreme Court.

The gig-based companies are adamantly fighting for Prop 22 to stay in place. Without it, they argue that their costs will go way up because workers will need to be granted benefits such as unemployment insurance and sick leave.

FISM News previously reported on the original effort to support Prop 22 back in August of 2020. At this time, Uber said in a statement that it would be forced to shut down its ride-hailing operations in California if it was forced to treat its workers as employees rather than independent contractors.