A California appeals court has upheld most of Prop. 22, a law passed in 2020 that classified gig economy workers as independent contractors rather than employees. The court ruling is a major victory for companies such as Uber and Lyft, which have long maintained that their drivers are independent contractors and not entitled to employee benefits such as paid sick leave or workers’ compensation.
The court decision has come after several challenges to the law, including a suit by labor unions arguing that the law went against California’s labor laws. However, the court maintained that the law was constitutional and did not violate the rights of California workers.
Following the decision, shares of Uber and Lyft rose, as investors breathed a sigh of relief that the companies would not be forced to reclassify their drivers as employees.
Supporters of Prop. 22 have argued that it provides flexibility for workers and allows them to work on their own terms, but opponents argue that it denies workers important labor protections.
The court’s decision is likely to have wider implications for other gig economy companies operating in California, but it remains to be seen whether labor groups will continue to challenge the law.