Uber loses challenge to California gig work law in US appeals court

(Reuters) — A U.S. appeals court on Monday rejected a bid by Uber and subsidiary Postmates to revive a challenge to a California law that could force the companies to treat drivers as employees rather than independent contractors who are typically less expensive.

An 11-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco upheld a lower court ruling that said Uber failed to show that the 2020 state law known as AB5 unfairly singled out app-based transportation companies while exempting other industries.

Uber in a statement on Monday said the ruling would not change the status of its relationships with its drivers, who are considered to be contractors under a 2020 ballot initiative known as Proposition 22.

The fate of Prop 22 is being weighed in a separate case at the state’s top court, which last month heard arguments from a labor union and four drivers contending the ballot measure was unconstitutional.

A representative for the California attorney general’s office did not immediately respond to a request for comment.

The 9th Circuit in its ruling said “there are plausible reasons for treating transportation and delivery referral companies differently from other types of referral companies.”

California’s AB5 raised the bar for proving that workers are truly independent contractors.