A San Francisco Judge on Monday ruled that Uber and Lyft are breaking California labor law. And he’s not mincing words about it.
Superior Court Judge Ethan Schulman sided with California Attorney General Xavier Becerra and numerous district attorneys, affirming that Uber and Lyft drivers need to be classified as employees, not contractors, under AB 5, a state law passed last year.
Uber and Lyft’s core argument, that they are not transportation companies but “platforms” for connecting riders and drivers, “flies in the face of economic reality and common sense,” Judge Schulman wrote in his ruling.
The injunction will be stayed for 10 days, which means Uber and Lyft will have a chance to appeal it. Both companies have vowed to do so.
The ruling is the most significant setback yet for the ride-hailing giants in their multi-front battle against AB 5, which forces gig economy companies to hire their workers as employees with regular salaries and benefits. In November, California voters will have a chance to weigh in on this debate with Prop 22, an Uber and Lyft sponsored ballot measure that would allow their drivers to continue to work as independent contractors with some added protections and benefits.
According to Judge Schulman, the upcoming ballot measure is irrelevant. “That Uber and Lyft are attempting to persuade voters to change the law, an effort that may or may not succeed, is no grounds for this Court to refrain from deciding the issues before it,” he wrote. “Defendants are not entitled to an indefinite postponement of their day of reckoning.”
Schulman also wrote that Uber and Lyft were trying to have it both ways, claiming that they were at once not subject to AB 5, but also unfairly “targeted” by it.
The ruling comes the same day as Uber CEO Dara Khosrowshahi published an op-ed in the New York Times arguing for labor law reform instead of reclassifying its employees as full-time workers. It also comes not long after DoorDash, another company campaigning against AB 5, began offering its San Francisco gig-workers a raise of 78 cents per day.
These companies have consistently argued that their drivers and delivery workers want to continue working as contractors who can set their own hours.
But that’s not what this lawsuit was about. It’s about whether Uber and Lyft’s current labor practices comply with California law, which states that workers who are central to the functioning of a business must be classified as employees.
According to Judge Schulman, the answer is a resounding no: “To state the obvious, drivers are central, not tangential, to Uber and Lyft’s entire ride-hailing business.”