California court docket upholds Prop 22 in win for Uber, Lyft, DoorDash

A California appeals court docket on Monday reversed a lower-court ruling that discovered Proposition 22, the poll measure handed in November 2020 that labeled Uber and Lyft drivers as unbiased contractors fairly than staff, to be unlawful.

The choice by three appeals court docket judges, first reported by The Wall Street Journal, is a win for app-based firms that depend on gig staff to ferry passengers and ship meals, however don’t pay for prices that an employer would, like unemployment insurance coverage, sick go away and different enterprise bills.

In August 2021, Frank Roesch, a superior court docket choose, dominated that Prop 22 was unconstitutional and due to this fact “unenforceable.” Roesch stated Prop 22 restricted the state legislature’s authority and its means to move future laws. The businesses appealed that call, which led to as we speak’s ruling within the California First District Courtroom of Attraction.

The reversal of that call not solely preserves the unbiased contractor mannequin in California, however might push the efforts of firms like Uber, DoorDash and Lyft in different states. All three firms noticed shares soar in after-hours buying and selling following the court docket choice.

Nonetheless, the battle over Prop 22 isn’t but over. The Companies Staff Worldwide Union (SEIU), which filed a lawsuit difficult Prop 22 in early 2021, is anticipated to attraction the choice to the California Supreme Courtroom. The upper court docket would have a number of months to determine whether or not to listen to the case, however within the meantime, Prop 22 will stay in impact.

Prop 22 made it to California’s 2020 poll after the state sued Uber and Lyft that yr, saying they have been in violation of AB-5, the state’s new legislation that sought to reclassify drivers as staff. After a number of authorized squabbles, the businesses — together with DoorDash and Instacart — requested state voters to exempt them from the legislation. They spent a collective $200 million promoting the poll measure and convincing drivers that Prop 22 would supply them with extra flexibility in addition to some advantages. California voters handed the proposition roughly 59% to 41%.

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