Appeals Court Rules Uber and Lyft Must Stop Classifying Drivers as Contractors

Transportation Network Companies (TNCs)

Written By ESR News Blog Editor Thomas Ahearn

On October 22, 2020, a California appeals court ruled in a unanimous decision that Uber and Lyft must comply with a preliminary injunction requiring them to stop classifying their drivers as independent contractors so they receive the same protections and benefits as other workers at the transportation network companies (TNCs).

The appeals court decision did not address who should win The People of California v. Uber Technologies and Lyft but said the trial court “properly considered the harm shown by the record” in light of “its determination that the People showed a reasonable probability – indeed, an ‘overwhelming likelihood’ – of prevailing at trial.”

The order will not take effect right away, as Uber and Lyft will have approximately 60 days to ask the California Supreme Court to review the decision. According to the opinion, the temporary reprieve granted to the two TNCs for the length of the appeals process will be lifted 30 days after the case is sent back to the trial court.

“Californians have fought long and hard for paycheck and benefit protections,” California Attorney General Becerra said in a statement. “Uber and Lyft have used their muscle and clout to resist treating their drivers as workers entitled to those paycheck and benefit protections. The courts saw right through their arguments.”

On August 10, 2020, California Superior Court Judge Ethan Schulman ruled Uber and Lyft failed to comply with California Assembly Bill No. 5 (A.B. 5), a law that ensures “gig economy” workers could receive health insurance, workers’ compensation, and paid sick and family leave. Independent contractors are not provided these benefits.

The complaint filed in May 2020 on behalf of the People of the State of California claimed Uber and Lyft misclassified drivers as independent contractors and not employees in violation of A.B. 5. Voters in the state will consider Proposition 22, a ballot initiative exempting Uber and Lyft from A.B. 5, in the November 2020 election.

Gig economy businesses are taking the background checks of their on-demand workforces more seriously with ongoing monitoring and continuous screening on workers, according to Employment Screening Resources® (ESR), which selected this trend as one of the “ESR Top Ten Background Check Trends” for 2020.

Employment Screening Resources® (ESR) – a global background check firm accredited by the PBSA – offers solutions for screening “gig economy” workers and a white paper titled “Background Screening of Extended Workforce Necessary to Compete in Modern Economy.” To learn more about ESR, visit www.esrcheck.com.

NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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