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Court Rejects Uber’s Challenge to California Gig Worker Law

Uber said Monday (June 10) that a U.S. appeals court decision rejecting the company’s challenge to a California law that could force it to treat drivers as employees rather than independent contractors will have no impact.

“While today the 9th Circuit decided to leave AB5 intact, Uber drivers and couriers remain independent as a result of Proposition 22, which preserves their flexibility while providing them with important new benefits,” Uber said in a statement emailed to PYMNTS. “This decision does not change the status of the law in California in any way.”

Uber argued before the court that AB5, which became a state law in 2020, unfairly singled out app-based transportation companies, Reuters reported Monday.

Proposition 22, a ballot initiative that determined that Uber drivers are independent contractors, is being heard by California’s top court in another case, according to the report.

In its ruling on AB5, the 9th Circuit said that transportation and delivery referral companies could be treated differently than other referral companies because the California legislature views them as “the most significant perpetrators” of worker misclassification, per the report.

AB5 makes it harder for companies to prove that workers are independent contractors, the report said.

Uber launched its legal challenge to AB5 in December 2019. While a federal judge dismissed the lawsuit at one point, a 9th Circuit panel revived the case, saying the law’s exemptions were “piecemeal.” However, that ruling was overturned by the decision announced Monday, per the report.

The case challenging the ballot measure Proposition 22 was brought by the Service Employees International Union (SEIU) and four drivers and is being heard by the California Supreme Court.

The central issue is whether gig workers should be treated as employees or contractors. Employees are entitled to benefits such as the minimum wage, overtime pay, reimbursements for expenses and other protections that independent contractors do not receive.

Massachusetts, too, is grappling with the question of worker classification and how to ensure fair treatment and adequate protections for gig workers, while preserving the flexibility and accessibility that have defined this segment of the workforce.