Uber, Lyft, and the Gig Economy Score Legal Win in California Courts


After an appeals court reversed a lower court’s ruling declaring Proposition 22 illegal, companies that depend on the gig economy for workers won a major victory in court Monday.

Proposition 22 was passed in November 2020 by a large margin. It exempts app-based gig economy drivers of California’s terrible AB5 law, and allows them to continue working as independent contractors. It was invalidated almost one year later by a California court.

However, a legal challenge to this ruling continued and, one year and a quarter later, these app-based companies won a victory according to Wall Street Journal.

A lower court ruling declaring Proposition 22 illegal in California was overturned by a state appeals court. Proposition 22, which was passed in November 2020 allowed these companies continue to treat their drivers like independent contractors.

Uber and other companies are engaged in a global battle with regulators to determine whether or not to provide more benefits, such as paid sick and health insurance, to workers in the gig economy. This is where apps assign individual tasks to a group of people that companies consider independent contractors.

A group of ride-share drivers and labor unions challenged the constitutionality Proposition 22. The original movement to pass AB5 had been largely driven by labor unions. The will of the voters, who include many contractors for apps-based businesses or are related to those who are, tried to stop that legislation. It would have crippled these companies and caused job losses.

This ruling is just one part of a larger struggle that goes beyond California. House Democrats in Washington D.C. also tried to pass similar legislation that was based on California’s model. This would be a huge win for labor unions, at the expense workers. Uber and Lyft threatened to shut down their California business rather than change their business model.

If Democrats can ever force such a measure nationwide, similar devastating results could be observed across the country.