(Reuters) – A California judge on Monday granted the state's request for a preliminary injunction blocking Uber Technologies Inc. and Lyft Inc. from classifying their drivers as independent contractors rather than employees.
Judge Ethan Schulman of the San Francisco Superior Court is a defeat for the riders who have gone as they defend against a lawsuit on May 5 by State Attorney Xavier Becerra and the cities of Los Angeles, San Diego and San Francisco.
Uber and Lyft had been accused of violating Assembly Bill 5, a new state law requiring companies to classify workers as employees if they controlled how workers did their jobs, or work was part of their normal business.
In a 34-sided decision that erroneously lost money on companies' "long-standing and courageous refusal" to comply with state law, Judge Schulman said the plaintiffs showed an "overwhelming probability" that they could prove Uber and Lyft classified drivers illegal.
"This is a tremendous victory for thousands of hard-working Uber and Lift drivers ̵
Judge Schulman delayed the execution of his order by ten days to allow appeals, which Lyft said it would continue.
California voters are expected in November to consider a voting measure, Proposition 22, to classify app-based drivers as entrepreneurs. is Uber and Lift's largest U.S. market.
"Drivers do not want to be employees," Lyft said in a statement. "Ultimately, we believe this issue will be decided by voters in California and that they will go with drivers."
Uber did not immediately respond to a request for comment
Hundreds of thousands of "gig" workers, including many on ride-hauling companies and app-based food deliveries, are affected by AB5, which t entered into force on 1 January and had broad support from organized labor.
Judge Schulman said the defendants' argument that they were not "hiring entities" covered by AB5 "flies in the face" of Uber's claims in other litigation, and their "collective effort" to overthrow the law in November.
He also said that the public could suffer significant damage if drivers were denied employee benefits such as minimum wage, paid sick and family leave, unemployment insurance and workers' compensation insurance.
“These damages are not just abstractions; they represent real harm to real working people, "Judge Schulman wrote.
The judge said that Uber and Lyft were to blame if their resilient state laws contributed to all the" far-reaching "effects that a ban can have.
" Defendant perhaps not avoiding legislative mandates just because their companies are so large that they affect the lives of many thousands of people, ”he wrote.