Uber, Lyft Hit With Bombshell Driver Ruling as Key Vote Looms
- Court orders California drivers to be treated as employees
- Decision puts spotlight on ballot measure that rewrites law
Uber Technologies Inc. and Lyft Inc. face the gravest threat yet to their business models after an appeals court ruled they must treat their drivers in California as employees instead of independent contractors.
The bombshell decision Thursday comes less than two weeks before an election in which the ride-hailing companies are counting on voters to approve a ballot measure that would partially exempt them from the labor law at issue in the legal fight. If the vote doesn’t go their way, Uber and Lyft are threatening to shut down in their home state.
The ruling upheld a lower court’s order that the companies comply with Assembly Bill 5 -- which took effect in January -- and provide drivers with the costly benefits that employee status confers.
“Although the business context may be relatively new, we conclude that the injunction was properly issued in accordance with enduring principles of equity,” the three-judge appeals panel said in its ruling. “It is broad in scope, no doubt, but so too is the scale of the alleged violations.”