Ruling Forces Ridesharing Services to Reclassify Drivers as Employees in California

The future of ridesharing services, such as Uber and Lyft, in California are very much in jeopardy as on Thursday, a California appeals court stated that the two companies must reclassify their drivers as employees rather than independent contractors. The decision, which reaffirms a lower court’s ruling, gives Uber and Lyft 30 days to comply with the ruling, assuming they do not appeal the decision.

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photo: person filling out a paper application form

Applying California’s ABC Test to Determine Employee Status

The assessment of whether a worker is an independent contractor or an employee is a fact-intensive inquiry. Moreover, different tests apply depending on the law. Thus, while a worker may be classified as an independent contractor under federal tax law, the same worker may be classified as an employee under the Fair Labor Standards Act, the federal law covering minimum wage and overtime.

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