In May, the State of California filed its own suit against Lyft and Uber arguing that workers for the companies were improperly classified in violation of the new law. (Credit: Daniel Dror/Shutterstock)
The California Public Utilities Commission (CPUC) has decided that drivers working for ride-hailing services such as Uber Technologies Inc. and Lyft Inc. will be considered employees as is depicted under California's new gig worker law. The decision comes after a state law became effective that makes it more difficult for companies to classify workers as contractors as opposed to employees.
Having workers designated as contractors exempt an employer from paying overtime, health care, and workers' compensation, but can also go against the essence of the "gig economy" business model of technology platforms such as Uber and Lyft that rely on more inexpensive contract workers. The CPUC, which regulates ride-hailing companies across the state, said that it has to enforce state law, and in order to do that, drivers for transportation network companies would be considered employees, at least for now.
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