Uber, Lyft Drivers Are Employees, Says California

Drivers working for ride-hailing services such as Uber Technologies Inc and Lyft Inc will be considered employees under California’s new gig worker law.

The California agency that regulates buses, limousines, and app-based transportation companies, the California Public Utilities Commission, declared its decision in an order published on June 9, 2020.

The order states that “a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor” under AB5, the state’s new law covering gig work, which became effective on January 1st, 2020.

Under the independent contractor designation ride-sharing companies like Uber and Lyft were exempted from paying for overtime, healthcare and workers’ compensation for their drivers. Uber, Lyft, and other app-based companies say an employee model would diminish the flexible nature of the work that attracts many drivers.

The regulators also warned the companies that they have to provide workers’ compensation for their employees by July 1st. If they don’t comply, it could revoke their operating authority under state law.

“Being covered by workers’ compensation is a big win for rideshare drivers,” says Rachel Mahoney, partner at Cole, Fisher, Cole, O’Keefe + Mahoney, Fresno’s leading workers comp. law firm. 

“This coverage will grant them access to medical treatment for on-the-job injuries immediately  and without regard to fault. Due to the nature of their work, rideshare drivers are at increased risk of motor vehicle accidents. It is appropriate - and important - that the employers bear the risk of these on-the-job injuries,” Mahoney adds.

Uber in December sued to block the new law, known as AB5, arguing that it punished app-based companies and was unconstitutional. Both companies also pointed to a November ballot initiative exempting them from the law. Under the companies’ proposal, drivers would receive mileage-based subsidies, healthcare stipends and occupational accident insurance, while maintaining their flexibility as contractors.

"For now, Transportation Network Company (TNC) drivers are presumed to be employees and the Commission must ensure that TNCs comply with those requirements that are applicable to the employees of an entity subject to the Commission's jurisdiction," the commission said.

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Cole, Fisher, Cole, O’Keefe + Mahoney is Central California’s leading workers’ compensation and social security disability law firm. With over 30 years of successful experience, we are committed to securing maximum benefits for our clients in the Fresno, California area. Schedule a free consultation today.