Court Rules Uber and Lyft Drivers Are Contractors

Uber and Lyft have landed a victory in their battle to treat drivers as contractors.

In a ruling issued Monday (Mar. 13), California’s 1st District Court of Appeals said that the two ride-hailing firms and other companies like them can continue to treat drivers in the state as independent contractors, and not as employees entitled to worker benefits and protection.

The ruling upholds Proposition 22, a ballot measure backed by voters in 2020 that determined that Lyft and Uber drivers were independent contractors. In 2021, a lower court ruled that Proposition 22 was unconstitutional.

“We are pleased that the court upheld the democratic will of the voters and the fundamentals of Prop 22,” Lyft said in on its blog.

“Prop 22 protects the independence drivers value and gives them new, historic benefits. After Prop 22 went into effect, more than 88% of California drivers surveyed said that it has been good for them.”

As PYMNTS has noted, while Proposition 22 passed by a wide margin – nearly 60% of the vote – some voters later said they felt they were misled.

“I definitely feel deceived,” one voter told The Washington Post. “We all felt that Prop 22 was going to help the drivers, and Uber and Lyft were going to be paying them more, when really they’re just trying to save their own pockets.”

Lorena Gonzalez Fletcher, head of the California Labor Federation, posted a message on Twitter Monday evening saying that calling the ruling disappointing would be an understatement.

“Today the Appeals Court chose to stand with powerful corporations over working people, allowing companies to buy their way out of our state’s labor laws and undermine our state constitution,” she said.

Though the ruling is a setback for labor unions, the court did say companies can’t prevent drivers from joining a union or engaging in collective bargaining.

The ruling comes as Uber and Lyft appear to be charting different courses for their businesses, as was noted here recently.

PYMNTS wrote last month that Uber’s emphasis on a broader platform — adding delivery and freight to its original ride-hailing service — stands in contrast to Lyft, which has focused only on letting consumers book rides.

And although recent earnings reports from both firms show renewed demand for ride hailing among consumers, “Uber’s top line growth far outpaced Lyft’s, logging a roughly 50% gain, because there are a number of services and offerings in place that are complementary to ride-hailing,” PYMNTS wrote.