California injunction assails Uber, Lyft business model

Editors note: California Employment Law Letter co-editor Mark I. Schickman was inter-viewed for the following article, which first appeared in the HR Daily Advisor ezine and is re-printed with permission.

Uber and Lyft are under orders to reclassify their drivers in California as employees instead of independent contractors, after a judge issued a temporary injunction on Au-gust 10. Uber quickly announced it would file an emergency appeal.

The injunction comes as a result of a lawsuit the state filed claiming the app-based rideshare companies are in violation of a state law, Assembly Bill (AB) 5, that went into effect in January. AB 5 sets strict criteria for independent contractors and assumes most workers should be classified as employees instead of contractors.

Mark I. Schickman of Schickman Law in Berkeley, California, says the judge's deci-sion isn't surprising. Although the companies maintain they should be considered app development companies more than businesses providing rides, the court said it defies common sense to say that, so they "don't have much of a chance in court," Schickman says.

Uber, Lyft, and other businesses relying on the same business model are hoping for a better chance in November, when California voters will decide on Proposition 22, which seeks to define app-based transportation and delivery drivers as independent contrac-tors.

Website Ballotpedia.org says Uber and Lyft—along with other companies, including DoorDash, Instacart, and Postmates—have invested millions in the campaign to pass Proposition 22.