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Updated at 6:48 p.m. ET
A California judge ordered Uber and Lyft to reclassify their workers from independent contractors into employees of interest, a ruling that could have consequences for contract economists if they still exist in the appeals process.
California Superior Court Judge Ethan Schulman ruled on Monday that thousands of Lyft and Uber’s contract drivers must be protected and entitled to the same labor law rights as other full-time employees. of ride-hailing companies.
Schulman said Lyft and Uber used “circular reasoning” by only treating technology employees, not drivers, as employees.
Schulman writes: “If this rationale is accepted, the vast majority of industries that rely heavily on rapidly expanding technology could deprive the workers of their fundamental protection of their followers. the labor and employment laws of the state, ”wrote Schulman.
The judge said Uber and Lyft refused to comply with California’s laws passed last year that are supposed to make it harder for firms in the state to hire workers as contractors, so contract economists like Drivers for the ride-hailing companies will get wellness. insurance, compensation for workers and sick and family leave are paid. As independent contractors, Uber and Lyft drivers are not provided with these benefits.
“It should be emphasized that these harms are not just abstract,” Schulman wrote. they represent real harm to real people ”.
California Attorney General Xavier Becerra calls the judge’s preliminary order a win for the drivers.
“The court has weighed and agreed: Uber and Lyft need to stop illegally classifying their drivers while our case continues,” Becerra said in a statement. “The state and our workers don’t need to accept invoices when big businesses try to ignore their responsibilities. We will continue to work to ensure Uber and Lyft are playing by the rules.”
The judge’s order doesn’t last for 10 days. Both Uber and Lyft have said they plan to appeal.
“Most drivers want to work independently, and we’ve made significant changes to our app to make sure it’s still under California law,” Uber spokesman Matt Kallman said. “When more than 3 million Californians are out of work, our elected leaders should focus on creating jobs, not trying to shut down the entire industry during the recession.”
In a statement, Lyft said: “The driver doesn’t want to be an employee, stop completely. We will immediately appeal against this ruling and continue to fight for their independence. We believe this will be decided by California voters and will be with the drivers. “
After a new state law, known as AB5, was passed, Becerra and city officials in Los Angeles, San Diego and San Francisco sued Uber and Lyft to force companies to comply.
The order on Monday comes before the hearing in that case. But Schulman says there is a “high chance” that the state of California will win.
Uber and Lyft have asked the court to postpone the order until after November, when California voters will be asked whether to keep drivers as independent contractors, but Schulman dismissed the request.
“The defendants do not have the right to indefinitely postpone their trial date,” the judge wrote.
Uber and Lyft, which have already had difficulty making profits, have argued that converting drivers to full-time employees will force companies to lay off drivers and lead to higher passenger prices.
Ride-on companies have suffered severe consequences during the pandemic.
In an earnings call with investors earlier this month, Uber said its core business of picking and sending riders has fallen by nearly 75%.
Uber is now making more food delivery than ride hailing. However, its revenue is still down 30% year-on-year.
Since the outbreak of the coronavirus, Uber has laid off around 6,700 office workers and Lyft has laid off nearly 1,000 employees.
San Francisco City Attorney Dennis Herrera said in a statement on Monday that drivers need additional protections, such as eligibility for unemployment benefits, than ever before when the economic downturn causes Many workers are particularly vulnerable.
“These companies have pocketed millions of dollars by letting taxpayers pay,” says Herrera. That is not acceptable. “There’s no rule that prevents these drivers from continuing to have all the flexibility they currently enjoy. Being properly categorized as the employee doesn’t change that.”