Uber loses California gig work law challenge

A federal appeals court in California ruled Uber’s challenge to a state law aimed at making transportation gig workers employees instead of independent contractors cannot go forward, handing a major defeat to the tech company as it attempts to control costs.

California AB5 was passed in 2019, intended to make app-based workers — such as those for Uber, Lyft and Postmates — full employees with a minimum wage, workplace protections and other benefits. The law was immediately challenged by Uber and struck down by an appeals court after years of deliberation.

Monday’s ruling from an 11-judge panel of the 9th Circuit of Appeals reverses the first appellate decision, determining the law does not illegally single out transportation gig workers, but merely changes regulations for all independent contractors. 

The California Legislature “perceived transportation and delivery companies as the most significant perpetrators of the problem it sought to address — worker misclassification,” Circuit Judge Jacqueline Nguyen wrote in the court’s decision.

Companies like Uber have strongly fought back attempts at requiring their workers to be considered employees because employees incur significantly more costs than contractors. A similar Massachusetts ballot measure is also being challenged in court.

In California, statewide ballot measure Prop 22 in 2020 determined companies like Uber can consider their employees to be contractors. That measure is also being challenged in court, with a labor union arguing last week that it unjustly hampers future legislation.

An Uber spokesperson told The Hill the decision will not directly affect its relationship with its drivers because of Prop 22.