Legal battles are closing in on companies like Uber to prevent them from classifying drivers as independent contractors instead of employees, as a California judge has issued a preliminary injunction against the practice.
The Guardian reports that the move came this week in response to a lawsuit filed by the state of California against Uber and Lyft in May.
The lawsuit alleged the companies are misclassifying their drivers under the state’s new labour law.
That law, known as AB5, took effect on 1 January and is the strictest of its kind in the US, the Guardian reports. This is a blow to both companies as California is their largest market in America.
AB5 makes it more difficult for companies to classify workers as independent contractors instead of employees who are entitled to minimum wage and benefits.
The issue has been brought to a head by the coronavirus pandemic, which has seen ridership figures fall dramatically and makes the lack of workers’ compensation and unemployment benefits an increasingly urgent issue.
The San Francisco superior court has provided a 10-day stay during which Uber can file an appeal – which the company has said it plans to do immediately.
'When over three million Californians are without a job, our elected leaders should be focused on creating work, not trying to shut down an entire industry during an economic depression,' an Uber spokesman said.
Uber has made changes since AB5 went into effect, including allowing drivers to set their own rates.
And the company, along with Lyft and DoorDash, has spent more than $100m on a 2020 ballot measure to undermine the law.
The State of California accused the companies of 'an aggressive public relations campaign in the hopes of enshrining their ability to mistreat their workers' in its lawsuit.
UK Supreme Court
The news comes after a British court case, which was heard in July this year and was dubbed a 'final showdown' on the issue of self-employment as the arguments have now reached the UK's Supreme Court.
The case has seen two former Uber drivers, Yaseen Aslam and James Farrar, claim that by classing drivers as contractors the firm denies them basic rights.
'This is our final showdown with Uber but the stakes could not be higher,' Mr Aslam.
Jamie Heywood, Uber's regional general manager for Northern and Eastern Europe, said: 'Drivers can determine if, when and where they drive, but can also access free AXA insurance to cover sickness or injury, as well as maternity and paternity payments.'
The UK courts ruled in favour of the drivers in 2016 and Uber lost a subsequent appeal in 2018.
The US ride-hailing firm appealed again to the UK's Supreme Court, whose decision will be binding but has not been made yet, and could take months.
If successful, the Uber drivers could be entitled to an average of £12,000 each in compensation, according to law firm Leigh Day.