A court in California has ruled that drivers for companies like Uber, Lyft, and DoorDash can be treated as independent contractors and not employees.
On Monday, a three-judge panel of the state appeals court reversed a lower court ruling in 2021 that a measure known as Proposition 22 was unconstitutional. Prop22 had been approved in November 2020 and exempted app-based drivers from a 2019 law, AB5, that made it challenging to classify workers as independent contractors instead of employees.
Shares of Lyft, Uber, and DoorDash jumped by 6%, 7%, and 6% respectively after this latest ruling. These companies have been fighting with regulators for years about how they need to compensate and grant benefits including insurance and sick leave to their workers.
Read: Uber Working With Automakers To Produce Dedicated Ride-Share Vehicles
The decision of the three-judge panel is expected to be challenged before the California Supreme Court but it could take many months before the court decides whether to accept the case and likely over a year before it issues a ruling. If it is to toss out Prop22, it will be replaced by AB5 which would require the likes of Uber, Lyft, and DoorDash to reclassify drivers as employees, meaning they would be responsible for providing full benefits and hourly pay.
Jeffries told Reuters that had this most recent ruling not been made, the three companies would have experienced a combined hit of between $20 million and $170 million.
Word on this ruling comes just a couple of months after Uber chief executive Dara Khosrowshahi said the company was working with manufacturers on dedicated vehicles optimized for city use, conducting deliveries, and ferrying passengers.
