By: Rochelle Podolsky
On Monday, March 13, 2023, the California Court of Appeals ruled that Proposition 22 – a Californian constitutional amendment popularly ratifying Uber drivers as independent contractors – is largely constitutional.[1] As a result, Uber and Lyft drivers now are treated as independent contractors rather than traditional employees.[2]
How did we get here?
California has battled the classifications of workers since 2018 when the California Supreme Court established a new standard for what classified as an independent contractor.[3] Following such, a battle arose between the adversarial sides of labor and business through a 2020 ballot measure that allowed Uber, Lyft, and other platforms to classify their workers as independent contractors rather than employees.[4] In other words, Proposition 22 is a voter-approved law.[5] It passed with 58% of the vote in November 2020.[6]
How does this effect employees’ rights in California?
This change in the law greatly affects workers’ rights.[7] It is supported by powerful corporations in California.[8]This is because there is a vast difference between employees and contractors: employees have the right to a host of benefits and protections like minimum wage, sick leave, and family leave, unemployment, and disability benefits among others, while independent contractors do not have these same rights.[9] However, this ruling’s effects are not limited to the drivers themselves.
If Uber and Lyft do not have to contribute as many benefit packages to their drivers, other industries that try to hire the same workers will have newfound wage competition. Some argue that the “system is broken” because of this decision.[10] They further argue that this decision drastically undercuts and restrains the initiative power of California voters.[11] Many argue that this decision may not be the final mark as the Service Employees International Union could still appeal to the California Supreme Court.[12]
How does this compare to New York?
As of 2020 in the wake of the COVID-19 pandemic, Uber drivers in upstate New York were treated as employees for purposes of securing unemployment insurance.[13] This followed a decision from the NLRB in 2019 concluding that Uber drivers are contractors and not employees.[14] Although the NLRB made this ruling, the New York Unemployment Insurance Appeal Board in April 2019 ruled that Uber was required to pay unemployment benefits for its drivers.[15]
The New York decision in Matter of Lowry (Uber Tech., Inc.—Commissioner of Labor), 138 N.Y.S.3d 238 (N.Y. App. Div. 2020) from the Third Department affirmed this appeals board ruling.[16] The Court found a clear employment relationship between Uber and its drivers because of the required documentation drivers must provide to Uber including a driver’s license, background checks, driving history checks, and a confirmation that the driver’s vehicle is less than fifteen years old.[17] The Court additionally held that the fare calculation and payment structure supports an employment relationship.[18] While this decision was noteworthy for the rights of Uber drivers, it was limited to upstate New York.[19] This uncertainty leaves open the possibility of a constitutional amendment like that of California. The recent momentum of the California appellate division may encourage lobbying in New York and other states to adopt this popularly voted amendment.
[1] See Grace Gedye, Court Upholds California Prop. 22 in Big Win for Gig Firms Like Lyft and Uber, Cal Matters (Mar. 13, 2023), https://calmatters.org/economy/2023/03/prop-22-appeal.
[2] See id.
[3] See id.
[4] See id.
[5] See California Court Says Uber, Lyft Can Treat State Drivers as Independent Contractors, NPR (Mar. 14, 2023), https://www.npr.org/2023/03/14/1163301631/california-court-says-uber-lyft-can-treat-state-drivers-as-independent-contracto.
[6] See Gedye, supra note 1.
[7] Id.
[8] Id.
[9] See id.
[10] See id.
[11] See id (quotations omitted).
[12] See id.
[13] See Are Uber Drivers Employees in New York?, Her Law. (May 3, 2020), https://herlawyer.com/uber-drivers-employees-new-york.
[14] See Noam Scheiber, Uber Drivers Are Contractors, Not Employees, Labor Board Says, N.Y. Times (May 14, 2019), https://www.nytimes.com/2019/05/14/business/economy/nlrb-uber-drivers-contractors.html.
[15] Matter of Lowry (Uber Tech., Inc.—Comm’r of Lab.), 138 N.Y.S.3d 238, 239 (N.Y. App. Div. 2020).
[16] Id. at 240.
[17] See Miheret Hasenu, From Independent Contractors to Employees: New York Supreme Court Rules in Favor of Uber Drivers, Working Sols. (Jan. 25, 2021), https://www.workingsolutionsnyc.com/blog/from-independent-contractors-to-employees-new-york-supreme-court-rules-in-favor-of-uber-drivers.
[18] See id.
[19] See id.