California Supreme Court Upholds Measure Allowing Uber and Lyft to Classify Drivers as Contractors

California's Supreme Court upheld a measure allowing app-based services like Uber and Lyft to classify drivers as independent contractors. This decision, which dismissed a lawsuit challenging Proposition 22, is a significant win for the ride-hailing industry, potentially preventing companies from limiting or ending services in the state.

In a landmark decision on Thursday, California's Supreme Court upheld a voter-approved measure allowing app-based services such as Uber and Lyft to classify their drivers as independent contractors rather than employees who would be entitled to greater benefits.

This ruling represents a significant victory for the ride-hailing industry, which had warned that many companies might cease or limit their services in California if they were compelled to treat drivers as employees.

The court dismissed a lawsuit filed by the Service Employees International Union (SEIU) and four drivers, arguing that the 2020 ballot measure known as Proposition 22, which maintains drivers' contractor status while granting them some benefits, was unconstitutional.

(With inputs from agencies.)