Uber and Postmates lose US Supreme Court bid in worker classification case

The US Supreme Court declined to hear an appeal from Uber Technologies Inc. and its subsidiary Postmates regarding California’s Assembly Bill 5 (AB5), effectively upholding a lower court ruling that mandates stricter worker classification standards. AB5 requires companies to classify their drivers as employees instead of independent contractors, which would significantly increase labour costs for these companies.

The Supreme Court’s decision upholds a ruling from the 9th US Circuit Court of Appeals, which determined that Uber and Postmates failed to demonstrate that AB5 unfairly targeted their services while exempting other industries. Although California voters approved Proposition 22 in 2020, allowing gig economy companies to classify drivers as independent contractors, this measure does not completely exempt them from AB5’s requirements. Recently, the California Supreme Court upheld Proposition 22, rejecting labour union claims that it violated the state constitution.

Theane Evangelis, an attorney for Uber, reiterated the company’s position, stating that Proposition 22 ensures drivers retain independence while receiving certain benefits. Critics argue that classifying workers as independent contractors allows companies to avoid providing essential protections, such as minimum wage and overtime pay. As debates over gig worker classification continue, the US Department of Labor has proposed a federal rule to tighten criteria for independent contractor status, which is also being challenged in court by business groups.