U.S. Supreme Court rejects Uber and Lyft’s bid to avoid California driver suits

The U.S. Supreme Court on Monday declined to hear a challenge by Uber and Lyft to lawsuits by the state of California on behalf of drivers who signed agreements to keep legal disputes with the ride-hailing companies out of court in a legal battle over the status of them of entrepreneurs.

The justices rejected the two companies’ appeals of a lower court ruling that allowed the Democratic-led state’s attorney general and labor commissioner to pursue claims that Uber and Lyft owe money to drivers who were misclassified as independent contractors rather than employees .

The companies argued that federal law bars states from suing on behalf of anyone who has signed agreements to bring legal disputes in private arbitration rather than in court. That includes more than 60 million US workers and virtually any consumer who joins a subscription service, accepts a company’s terms and conditions, or registers a product.

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California filed separate lawsuits against the companies in 2020. A state appeals court in 2023 ruled against the companies in challenging the lawsuits. The California Supreme Court later refused to hear their appeals.

California is one of several Democratic-led states that have accused Uber and Lyft of depriving drivers of minimum wage, overtime pay, expense reimbursements and other protections by labeling them as independent contractors. Most federal and state wage laws only apply to employees, making it much cheaper for companies to hire contractors.

Uber, Lyft and other app-based services have denied they are employers of “gig workers” who could benefit from contracting flexibility.

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The industry has advocated for state ballot measures that would allow companies to treat workers as contractors in exchange for providing certain benefits. In July, California’s state court upheld such a measure backed by Uber and Lyft and overwhelmingly approved by state voters in 2020.

Uber and Lyft agreed in June to adopt a $32.50 hourly minimum wage standard for Massachusetts drivers and pay $175 million to settle a lawsuit by the state’s Democratic-led attorney general that claimed i -improperly treated drivers as independent contractors.

Uber and Lyft have also been sued by thousands of US drivers who say they should have been treated as employees. But few of those cases have resulted in final rulings, and many have gone to arbitration because most of the company’s drivers sign arbitration agreements.

(Reporting by Wiessner in Albany, New York; Editing by Will Dunham)

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