A USA appeals court has rejected a bid by Uber and subsidiary Postmates to revive a challenge to a California law that could force the companies to treat drivers as employees rather than independent contractors who are typically less expensive.
An 11-judge panel of the 9th USA Circuit Court of Appeals in San Francisco upheld a lower court ruling that said Uber failed to show that the 2020 state law known as AB5 unfairly singled out app-based transportation companies while exempting other industries. Uber in a statement said the ruling would not change the status of its relationships with its drivers, who are considered to be contractors under a 2020 ballot initiative known as Proposition 22.
The fate of Prop 22 is being weighed in a separate case at the state’s top court, which last month heard arguments from a labour union and four drivers contending the ballot measure was unconstitutional.
The 9th Circuit said “there are plausible reasons for treating transportation and delivery referral companies differently from other types of referral companies.” 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.
