Appeals court rules Uber, Lyft must comply with labor laws

A California appeals court on Thursday dismissed a challenge to a ruling requiring Uber and Lyft to classify their drivers as employees under state law.

The decision allows an August order from San Francisco Superior Court Judge Ethan Schulman compelling the rideshare giants to comply with AB5 to take effect, although likely not for at least 30 days.

The landmark labor law establishes a test for determining whether workers can be classified as independent contractors rather than employees.

Uber and Lyft have resisted complying with the law since it took effect this January, arguing their core business is technology rather than ride-hailing.

As full employees, drivers would get basic worker protections like a minimum wage and the right to organize.

Both companies had threatened to stop operating in the state entirely if forced to comply with the law.

However, they will have one more chance to avoid reclassifying their drivers and ask for the decision to be reviewed by the California Supreme Court.