California Ballot Measure That Classifies Uber, Lyft Drivers as Independent Ruled Unconstitutional

A California judge said the November ballot measure that allowed Uber Technologies Inc., Lyft Inc. and DoorDash Inc. to continue treating their drivers as independent contractors is unenforceable and unconstitutional.

The companies, which spent more than $200 million to pass Proposition 22 in November, said they would appeal the ruling.

The companies don’t need to immediately change their way of doing business, but Friday’s ruling adds a wrinkle in their efforts to preserve their independent-worker models and serves as a setback in their yearslong fight against the California law at the heart of the ruling.

Uber and other companies are in a global tug of war with regulators over whether and how to grant more benefits like paid sick leave and health insurance to workers in the so-called gig economy, where apps distribute individual tasks to a pool of people whom are generally regarded as independent contractors.

California sued the companies last year, saying they were in violation of the state’s so-called gig law because none of them reclassified their drivers as employees after the statute went into effect in 2020. A high-stakes legal battle ensued, culminating in Proposition 22, in which the companies asked state voters to exempt them from the law.