The U.S. Supreme Court on Monday declined to hear an appeal from Uber and Lyft regarding lawsuits filed by the state of California, representing drivers who had signed agreements to resolve legal disputes outside of court. This decision stems from an ongoing legal battle over the classification of these drivers as independent contractors.
The high court’s refusal to intervene maintains a California state appeals court ruling that permits the state’s attorney general and labor commissioner to pursue claims against the ride-hailing giants for misclassifying drivers. The companies are accused of failing to provide minimum wage, overtime pay, and other employee protections to these workers.
Uber and Lyft contend that federal law prohibits states from pursuing legal action on behalf of individuals who have agreed to resolve disputes through private arbitration. This issue impacts over 60 million workers in the U.S. and virtually anyone engaging with subscription services or signing terms of service agreements.
Theane Evangelis, an attorney representing Uber, expressed disappointment in the California court’s ruling and suggested that the Supreme Court may address this matter in a future case.
California initially filed lawsuits against Uber and Lyft in 2020, alleging that the companies wrongfully categorized drivers as independent contractors, thereby circumventing state labor laws. A state appeals court ruled against the companies in 2023, and the California Supreme Court later declined to hear their appeal.
The state of California is among several Democratic-led states alleging that Uber and Lyft are depriving drivers of crucial wages and protections by misclassifying them. Most federal and state labor laws apply only to employees, making it less costly for companies to hire independent contractors.
While Uber and Lyft have maintained that they do not employ gig workers, they have backed state ballot measures allowing for contractor status in exchange for certain benefits. In July, California’s highest court upheld such a measure, which was heavily favored by voters in 2020.
In June, both companies agreed to implement a $32.50 hourly minimum wage for drivers in Massachusetts and to pay $175 million to settle allegations from the state’s attorney general regarding improper classification of drivers. Despite these settlements, thousands of U.S. drivers continue to pursue legal action, asserting that they should be classified as employees rather than independent contractors. However, many cases have been sent to arbitration due to signed agreements between the drivers and the companies.
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