Shares of Uber and Lyft were down Tuesday morning following a California judge’s order that the ride-hailing giants should classify their drivers as employees instead of as independent contractors.
The ruling was a major blow for the tech giants in their largest market. Uber and Lyft have been accused of violating California’s Assembly Bill 5, which requires companies to classify their workers as employees if they control how workers do their jobs.
Uber’s stock was down 2 percent in early trading Tuesday, while Lyft was down 1.7 percent.
In a 34-page decision, Judge Ethan Schulman of San Francisco Superior Court slammed the companies’ “prolonged and brazen refusal” to comply with state law, and said the state showed an “overwhelming likelihood” it could prove Uber and Lyft classified drivers illegally.
Uber and Lyft have argued that they are not “hiring entities,” but instead provide technology that connects passengers and drivers. Schulman said there were many “glaring inconsistencies” in Uber and Lyft’s arguments, and that their “concerted effort” to overturn Assembly Bill 5 in the upcoming election is telling.
Schulman added that if Uber and Lyft’s arguments prevailed, “the rapidly expanding majority of industries that rely heavily on technology could with impunity deprive legions of workers of the basic protections afforded to employees by state labor and employment laws.”
Schulman also said the public could face substantial harm if drivers were denied employee benefits such as minimum wage, paid sick and family leave, unemployment insurance and workers’ compensation insurance.
“These harms are not mere abstractions; they represent real harms to real working people,” Schulman wrote.
Schulman delayed enforcing his order by 10 days to allow appeals, which Lyft said it will pursue.
“Drivers do not want to be employees,” Lyft said in a statement. “Ultimately, we believe this issue will be decided by California voters and that they will side with drivers.”
Los Angeles City Attorney Mike Feuer, who joined the state in bringing forward the worker misclassification lawsuit, called the ruling “a resounding victory for thousands of Uber and Lyft drivers who are working hard — and, in this pandemic, incurring risk every day — to provide for their families.”
“Of course our fight is not over and we will vigorously pursue this litigation until these workers have the permanent protection they deserve,” he said.
With Post wires