Can Uber and Lyft Drivers Get Workers’ Compensation?

How Uber and Lyft classify their drivers is an important legal question. In fact, it is currently being posed to California voters this election as Proposition 22. The vote will likely determine whether rideshare drivers are eligible to receive California workers’ compensation benefits if they are ever injured while driving.  

In California, an employee who gets injured or sick in the course of employment receives workers’ compensation benefits. California law presumes a worker is an employee unless the hirer can show the worker meets the statutory definition of an independent contractor. An independent contractor, however, is not eligible for workers’ compensation.

There are many different consequences to how rideshare drivers are classified, but this article will focus on workers’ compensation eligibility.

Uber and Lyft: Drivers are Independent Contractors

Uber and Lyft want their drivers to be legally recognized as independent contractors. They require their drivers to consent to that classification when they sign up to work. That means the rideshare companies do not have to carry workers’ compensation insurance. Workers’ compensation insurance would pay for their drivers’ medical treatment and disability after being injured in an accident while driving for them.

The State of California: Drivers are Employees

The state of California does not view drivers as independent contractors. In 2018, the California Supreme Court developed the “ABC test” to determine a worker’s proper classification. Using the test, a worker is presumed to be an employee, unless the employer can prove all three elements:

1.     The worker is free from the hiring party’s direction and control over how the work is to be performed.

2.     The work to be performed is outside the usual course of the hiring party’s business.

3.     The worker customarily engages in an independently established trade, occupation or business of the same nature as the personal services the worker is providing.

This test was then codified by the Legislature in 2020, known as Assembly Bill 5. Applying the ABC test to rideshare drivers, the California Public Utilities Commission, as the principal government regulator for ridesharing, found Uber and Lyft misclassify their drivers as independent contractors. Various city and state attorneys then sued Uber and Lyft to classify drivers as employees.

In August 2020, the San Francisco Superior Court ruled against Uber and Lyft. However, the California Court of Appeal granted an extended stay on the ruling during appeal. The stay required the rideshare companies to submit sworn statements confirming they have developed plans to comply with the court order if the appellate court affirms it—and if Proposition 22 is rejected.

California Proposition 22: Classification To Be Determined

In anticipation of Assembly Bill 5, the rideshare companies funded Proposition 22 for the 2020 state election, known as the “App-Based Drivers as Contractors and Labor Policies Initiative.” If the Yes on Proposition 22 campaign prevails, app-based transportation drivers are constitutionally defined as independent contractors. The ballot explicitly says workers’ compensation laws will not cover rideshare drivers.

Proposition 22 Contains a Workers’ Compensation-Lite Alternative

However, Proposition 22 would require Uber and Lyft to carry “occupational accident insurance.” If a driver is injured while using one of their apps, the insurance would cover medical expenses, pay lost income, provide temporary disability payments, and offer death benefits. While this alternative appears like several provisions under the workers’ compensation system, it can possibly come up inadequate in these critical ways:

·       The proposition’s reference to “injuries” is left undefined and illnesses contracted from work, like COVID-19, are not explicitly included.  

·       Insurance policies are limited to $1 million. That may not be sufficient for catastrophic injury cases. Workers compensation benefits are not so limited.

·       There is no provision for vocational training if the injury permanently prevents the driver from resuming ridesharing.

·       There is no permanent disability compensation, which is an especially necessary lifeline for many injured workers.

·       Last, it is unclear how claims disputes are resolved when the insurance company denies claims. They may require the driver to sue in court or go to arbitration.  

What is the State of the Law Right Now?

Currently, the California courts are allowing Uber and Lyft to continue to classify rideshare drivers as independent contractors. Many city and state attorneys general, as well as state regulators, take the position that rideshare drivers are employees of the rideshare companies. But an appellate court has paused any changes pending the outcome of the appeal.

However, any changes in classification also depend on the outcome of the vote on Proposition 22. If voters choose Proposition 22, the appeal will likely be moot, because drivers will be constitutionally exempt from workers compensation benefits. If the voters reject Proposition 22, the Court of Appeal will likely rule on the issue after the election. If it affirms the lower court’s order, they can likely pursue other paths for judicial relief.

The outcome of the election will allow us to more clearly see whether app-based drivers will be eligible for workers’ compensation.

Why You Should Talk to a Workers’ Compensation Attorney

This case clearly demonstrates how complex state workers’ compensation law can get. Therefore, you should talk to an attorney about any questions you may have about your workers’ compensation case. You can ask your questions during a free consultation with one at SoCal Workers’ Comp. Call or submit now.  

‍