A California appeals courtroom on Monday reversed a lower-court ruling that discovered Proposition 22, the poll measure handed in November 2020 that categorised Uber and Lyft drivers as unbiased contractors moderately than workers, to be unlawful.

The choice by three appeals courtroom judges, first reported by The Wall Road Journal, is a win for app-based corporations that depend on gig employees to ferry passengers and ship meals, however don’t pay for prices that an employer would, like unemployment insurance coverage, sick depart and different enterprise bills.

In August 2021, Frank Roesch, a superior courtroom decide, dominated that Prop 22 was unconstitutional and subsequently “unenforceable.” Roesch mentioned Prop 22 restricted the state legislature’s authority and its capability to cross future laws. The businesses appealed that call, which led to at present’s ruling within the California First District Court docket of Attraction.

The reversal of that call not solely preserves the unbiased contractor mannequin in California, however might push the efforts of corporations like Uber, DoorDash and Lyft in different states. All three corporations noticed shares bounce in after-hours buying and selling following the courtroom resolution.

Nonetheless, the battle over Prop 22 isn’t but over. The Providers Workers Worldwide Union (SEIU), which filed a lawsuit difficult Prop 22 in early 2021, is anticipated to attraction the choice to the California Supreme Court docket. The upper courtroom would have a number of months to resolve whether or not to listen to the case, however within the meantime, Prop 22 will stay in impact.

Prop 22 made it to California’s 2020 poll after the state sued Uber and Lyft that yr, saying they had been in violation of AB-5, the state’s new legislation that sought to reclassify drivers as workers. After a number of authorized squabbles, the businesses — together with DoorDash and Instacart — requested state voters to exempt them from the legislation. They spent a collective $200 million promoting the poll measure and convincing drivers that Prop 22 would supply them with extra flexibility in addition to some advantages. California voters handed the proposition roughly 59% to 41%.