A US court has ruled that “gig” economy giants including Uber and Lyft can continue treating their workers as independent contractors in the state of California.
The California appeals court found that a labor measure, known as Proposition 22, was largely constitutional.
Labor groups and some workers had opposed the measure, saying it robbed them of rights like sick leave.
The firms say the proposition protects other benefits such as flexibility.
The latest ruling overturns a decision made by a lower court in California in 2021, which found that Proposition 22 affected lawmakers’ powers to set standards at the workplace.
The state of California and a group representing Uber, Lyft, and other firms appealed against the decision.
On Monday, a three-judge panel at the appeals court ruled that workers could be treated as independent contractors. However, it removed a clause, which put restrictions on collective bargaining by workers, from Proposition 22.
Shares in Uber and Lyft were almost 5% higher in after-hours trading.
“Today’s ruling is a victory for app-based workers and millions of Californians who voted for Prop 22,” Tony West, chief legal officer at Uber said.
“We’re pleased that the court respected the will of the people and that Prop 22 will remain in place, preserving independence for drivers,” Mr. West added.
Lyft said that the proposition “protects the independence drivers value and gives them new, historic benefits.”
The Service Employees International Union, which challenged the constitutionality of Proposition 22 with several drivers, said it was considering appealing against the court’s decision
