Drivers for Uber Technologies Inc. (NYSE: UBER) and Lyft Inc. (NASDAQ: LYFT) should be considered employees and not independent contractors, according to a rule-making document filed with the California Public Utilities Commission this week.
In its finding, the CPUC says transportation network company “drivers are presumed to be employees and the commission must ensure that TNCs comply with those requirements that are applicable to the employees of an entity subject to the commission’s jurisdiction,” Commissioner Genevieve Shiroma wrote.
The document cited California’s AB 5 law that gets tough on independent contractor misclassification.
It noted that Uber, Lyft and other human cloud firms have qualified a ballot measure to go before California voters on Nov. 3 that would ensure drivers remain independent contractors. It also noted a lawsuit by the California Attorney General against the companies claiming misclassification. Other suits over the issue exist as well. Regardless, of the legal wrangling, the drivers should be employees, the CPUC document said.
Uber and Lyft criticized the rulings.
“Uber remains committed to expanded benefits and protections to drivers,” a company spokesperson told Business Insider. “If California regulators force rideshare companies to change their business model it could potentially risk our ability to provide reliable and affordable services along with threatening access to this essential work Californians depend on.”