BEERG Newsletter - Gig Economy: California court says drivers can be treated as contractors

As the European institutions prepare to try and hammer out a compromise text on the proposed Directive on Platform Workers, a Californian court has said that companies such as Uber and Lyft can continue to treat their drivers as contractors in California. 

The ruling by the 1st District Court of Appeal in San Francisco overturned a lower court’s 2021 ruling that Proposition 22 — passed by California voters the previous year — was “unenforceable” and unconstitutional. Proposition 22 exempts delivery-app and ride-share companies such as Uber and Lyft from classifying their drivers as full-time employees, meaning the companies do not have to provide benefits such as health insurance. (Under Proposition 22, they are only required to provide a contribution toward drivers’ health insurance coverage.) 

The ruling is likely to be appealed. In a statement, Uber’s chief legal officer Tony West hailed the ruling as “a victory for app-based workers” and said Proposition 22 “affords them new benefits while preserving the unique flexibility of app-based work.” 

The key issue in play in the European debate is whether there should be a presumption of employment built into the Directive with the burden of proof falling on platforms to prove otherwise.