Judge Rules Rideshare Benefit Exemption Law Unconstitutional

Written by: Andrew Morris

An Alameda County Judge has struck down a measure exempting rideshare companies like Lyft and Uber from employee benefits laws.

Superior Court Judge Frank Roach declared Friday that Proposition 22, a law passed to exempt Lyft and Uber employees from benefits as private contractors, is unconstitutional and cannot be enforced.

In November of last year, the proposition passed after rideshare companies invested more than $200 million to support the bill. Hiring employees as private contractors has many benefits. It keeps fares low and business up and allows the process to be quick and easy, with a “bring your own” type of policy. Independent contractors provide the means of transport, and more giant corporations offer the platform for the business.

“This ruling ignores the will of the overwhelming majority of California voters and defies both logic and the law,” Uber spokesman Noah Edwardsen said. “You don’t have to take our word for it: California’s attorney general strongly defended Proposition 22’s constitutionality in this very case.”

In lieu of this upcoming court battle, both Lyft and Uber stocks fell between 1 and 2 percent this Monday. Lyft, in particular, has dropped significantly from its recent peak at the beginning of July at $67.79 a share to just under $46 last Friday.

Rideshare companies are expected to fight this in court, maybe even to the Supreme Court level. It is important to understand that rideshare companies such as Uber and Lyft offer convenient travel for its users, and a means of income for their employees. Restricting these apps is a double edged sword that penetrates both the customer and employee.


Photo from: Jeffrey Braxton