Court rules Uber, Lyft must make drivers employees

A legal blow to Uber and Lyft. A California appeals court unanimously ruled Thursday that the ride-hailing companies must reclassify their drivers in the state as employees.

It all began in May. That’s when California sued the two companies for not complying with a state law that aims to reclassify app-based workers as employees who are entitled to benefits such as unemployment insurance and the minimum wage. A California judge in August ordered the companies to reclassify their drivers as employees. Uber and Lyft filed an appeal, threatening to leave the state.peals court judges ruled Uber’s and Lyft’s misclassification irreparably harmed drivers because they missed out on employee benefits as independent contractors.

Lyft and Uber said they were considering all legal options including an appeal.

The court ruling will not go into effect before a Nov. 3 company-sponsored ballot initiative that will let voters decide the future status of gig workers. Still, the decision narrows the companies’ options should their ballot fail.

Shares of Uber and Lyft fell in early trading Friday.