A legal battle has been unfolding in California since May in which the state filed a lawsuit alleging Uber and Lyft were classifying their drivers incorrectly.
That classification is that drivers are independent contractors and not employees.
Should this sound familiar that’s because it is. Earlier this year the California Assembly Bill 5 or AB5 was passed which sought to stop the incorrect classification of workers.
The crux of AB5 however is that it makes it more difficult to classify employees as contract workers.
This week, a Californian judge ruled that Uber and Lyft must classify drivers as employees in a preliminary injunction.
The judge ripped apart Uber and Lyft’s defense that they simply provide a platform through which riders and drivers connect to each other.
Perhaps most scathing was the judge’s comments about Lyft’s defense that drivers were “outside the usual course of business”. The judge said that no layperson would believe that stance given that Lyft’s entire business is based on driving folks around.
The judge found that drivers were not “merely incidental” and an optional part of these platforms, indeed without drivers, Uber and Lyft wouldn’t be able to function.
“Defendant’s position cannot survive even cursory examination. Far from ‘merely incidental’ to Defendants’ transportation network businesses, drivers’ work – the work of transporting customers for compensation – is ‘an integral part’ of those businesses,” California Superior Court Judge Ethan Schulman wrote.
“Defendants’ entire business is that of transporting passengers for compensation,” said the judge.
But, this injunction is stayed for 10 days and as you might expect Uber and Lyft are appealing.
Both companies stand firm on their opinion that drivers don’t want to be classified as employees.
“The vast majority of drivers want to work independently, and we’ve already made significant changes to our app to ensure that remains the case under California law,” an Uber spokesperson told The Verge.
While there may be some drivers who don’t want to be classified as an employee we do wonder who doesn’t want minimum wage, overtime compensation, paid leave days, reimbursements for the cost of driving for the company and other benefits that come hand-in-hand with being an employee.
This isn’t the first time that a case like this has been brought against Uber or Lyft and it surely won’t be the last.
We have to wonder what effect this injunction will have not just on Uber and Lyft in the US, but in markets around the world as well.[Image – CC 0 Public Domain Pexels]