SAN FRANCISCO -- A California appeals court has ruled Uber and Lyft violated a state labor law. Thursday's ruling said the rideshare companies misclassified their drivers as contractors rather than employees.
That goes against Assembly Bill 5, which grants fair wages and benefits to workers classified as employees. Uber and Lyft have argued that the law does not apply to the rideshare companies.
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The appeals court ordered Uber and Lyft to reclassify their drivers after 30 days while the case is returned to the trial court. The two companies can use that time to appeal to the California Supreme Court.
The California appeals court ruling raises the stakes for Proposition 22, a November ballot measure that seeks to exempt Uber and Lyft from the state law.
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The proposition, backed by both rideshare companies, would allow Uber, Lyft and food delivery apps to continue to categorize their drivers as independent contractors.
Uber and Lyft have threatened to leave California if they are forced to reclassify their drivers as employees.
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California appeals court rules Uber, Lyft must classify drivers as employees