(Reuters) — A California decide on Monday granted the state’s request for a preliminary injunction blocking Uber and Lyft from classifying their drivers as unbiased contractors moderately than workers.
The ruling by Judge Ethan Schulman of the San Francisco Superior Court is a defeat for the ride-hailing firms as they defend towards a May 5 lawsuit by state Attorney General Xavier Becerra and the cities of Los Angeles, San Diego, and San Francisco.
Uber and Lyft had been accused of violating Assembly Bill 5 (“AB5”), a brand new state legislation requiring firms to categorise staff as workers in the event that they managed how staff did their jobs or the work was a part of their regular enterprise.
In a 34-page choice faulting the money-losing firms’ “prolonged and brazen refusal” to adjust to state legislation, Schulman stated the plaintiffs confirmed an “overwhelming likelihood” they might show Uber and Lyft labeled drivers illegally.
“This is a resounding victory for thousands of Uber and Lyft drivers who are working hard — and, in this pandemic, incurring risk every day — to provide for their families,” Los Angeles City Attorney Mike Feuer stated in a press release.
Schulman delayed implementing his order by 10 days to permit appeals, which Lyft stated it would pursue.
California voters are anticipated in November to contemplate a poll measure, Proposition 22, to categorise app-based drivers as contractors. The state is Uber’s and Lyft’s largest U.S. market.
“Drivers do not want to be employees,” Lyft stated in a press release. “Ultimately, we believe this issue will be decided by California voters and that they will side with drivers.”
Uber didn’t instantly reply to requests for remark.
Several hundred thousand “gig” staff, together with many at ride-hailing firms and app-based meals supply providers, are affected by AB5, which took impact on January 1 and had broad assist from organized labor.
Schulman stated the defendants’ argument that they weren’t “hiring entities” coated by AB5 “flies in the face” of Uber’s claims in different litigation and their “concerted effort” to overturn the legislation in November.
He additionally stated the general public may face substantial hurt if drivers have been denied worker advantages corresponding to minimal wage, paid sick and household depart, unemployment insurance coverage, and staff’ compensation insurance coverage.
“These harms are not mere abstractions; they represent real harms to real working people,” Schulman wrote.
The decide stated Uber and Lyft had themselves in charge if their resisting state legal guidelines contributed to any “far-reaching” results an injunction might need.
“Defendants may not evade legislative mandates merely because their businesses are so large that they affect the lives of many thousands of people,” he wrote.
(Reporting by Jonathan Stempel in New York, modifying by Chris Reese and Dan Grebler.)