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California appeals court upholds order requiring Uber, Lyft to classify drivers as employees
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California appeals court upholds order requiring Uber, Lyft to classify drivers as employees

California Court of Appeal Associate Justice Jon Streeter has upheld a trial court decision ordering Uber and Lyft to reclassify drivers in California as employees.

The ride-sharing companies were first sued for their alleged violation of California state law AB-5, which classifies workers as employees rather than independent contractors “unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work.”

In August, Judge Ethan Schulman of the San Francisco Superior Court granted a preliminary injunction to restrain Uber and Lyft from classifying their drivers as independent contractors. He found that the work performed was not “outside the usual course” of the company’s business, even though the “[d]efendants stoutly deny the reality that they are in the business of transporting passengers for compensation.”

Justice Streeter affirmed the lower court decision Thursday, finding that improperly classifying drivers can pose substantial harms to workers who are denied benefits and wages they would been earned if they were properly classified by Uber and Lyft. As he wrote: “These harms are not mere abstractions; they represent real harms to real working people – consisting for instance of receiving low pay for long hours, having no overtime pay, breaks, health insurance, or sick leave, and being force to pay business expenses.” The harm to workers would be considered so “grave or irreparable” that they favored the trial court’s discretion in issuing a preliminary injunction against the companies.

The decision will most likely be challenged by Uber and Lyft, as they are requesting California Supreme Court review.