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The California Supreme Court ruled Thursday that app-based ride-hailing and delivery services like Uber and Lyft can continue treating their drivers as independent contractors rather than employees.
The unanimous decision by the state’s top court is a big win for tech giants. It also ends a yearslong legal battle between labor unions and tech companies over a law dictating the status of app-based service workers in the state.
The ruling upholds a voter-approved law passed in 2020 that said drivers for companies like Uber and Lyft are independent contractors and are not entitled to benefits like overtime pay, paid sick leave, and unemployment insurance. Opponents said the law was illegal in part because it limited the state Legislature’s authority to change the law or pass laws about workers’ compensation programs.
A lower court ruling in 2021 had said the measure was illegal, but an appeals court reversed that decision last year. The California Supreme Court’s decision means companies like Uber and Lyft can continue their operations as before.
Uber called the ruling “a victory” for drivers. Companies like Uber, Lyft and DoorDash spent $200 million on a campaign in 2020 to help the law pass.
“Whether drivers or couriers choose to earn just a few hours a week or more, their freedom to work when and how they want is now firmly etched into California law, putting an end to misguided attempts to force them into an employment model that they overwhelmingly do not want,” the company said in a statement Thursday.
The ruling is a defeat for labor unions and their allies in the Legislature who fought to secure more rights for drivers.
“What’s going on is not just. It’s not what California is about,” said Nicole Moore, president of Los Angeles-based Rideshare Drivers United. “It’s a sad day for workers.”
Labor unions vowed to continue fighting for drivers’ job protections and benefits, noting that an earlier ruling in the appeal process had opened doors for the Legislature to pass laws to allow drivers to join a union.
“We are committed to fiercely backing workers across our economy who have been written out and left behind and helping them knock down big obstacles to winning their union rights,” Service Employees International Union President April Verrett said in a statement.
Lawmakers in 2019 passed a law aimed directly at Uber and Lyft, mandating they provide drivers with protections like minimum wage, overtime, health insurance, and reimbursement for expenses. It changed the rules in California of who is an employee and who is an independent contractor.
While the law applied to lots of industries, it had the biggest impact on app-based ride-hailing and delivery companies. Their business relies on contracting with people to use their own cars. Under the 2019 law, companies would have to treat those drivers as employees and provide certain benefits that would greatly increase the businesses’ expenses.
In November 2020, voters approved a ballot proposition to exempt app-based ride-hailing and delivery companies from the law. The proposition included “alternative benefits” for drivers, including a guaranteed minimum wage and subsidies for health insurance if they average at least 25 hours of work a week.
Labor groups and drivers across the nation are pushing for more job protections, higher wages, and increased benefits. Drivers in Massachusetts are rallying behind what they describe as a first-of-its-kind ballot question that could win them union rights if approved.
Hollywood’s video game performers announced they would go on strike Thursday, throwing part of the entertainment industry into another work stoppage after talks for a new contract with major game studios broke down over artificial intelligence protections.
The strike — the second for video game voice actors and motion capture performers under the Screen Actors Guild-American Federation of Television and Radio Artists — will begin at 12:01 a.m. Friday. The move comes after nearly two years of negotiations with gaming giants, including divisions of Activision, Warner Bros., and Walt Disney Co., over a new interactive media agreement.
SAG-AFTRA negotiators say gains have been made over wages and job safety in the video game contract, but that the two sides remained split over the regulation of generative AI. A spokesperson for the video game producer, Audrey Cooling, said the studios offered AI protections, but SAG-AFTRA’s negotiating committee said that the studios’ definition of who constitutes a “performer” is key to understanding the issue of who would be protected.
“The industry has told us point blank that they do not necessarily consider everyone who is rendering movement performance to be a performer that is covered by the collective bargaining agreement,” SAG-AFTRA Chief Contracts Officer Ray Rodriguez said at a news conference Thursday afternoon. He said some physical performances are being treated as “data.”
Without guardrails, game companies could train AI to replicate an actor’s voice, or create a digital replica of their likeness without consent or fair compensation, the union said.
“We strike as a matter of last resort. We have given this process absolutely as much time as we responsibly can,” Rodriguez told reporters. “We have exhausted the other possibilities, and that is why we’re doing it now.”
Cooling said the companies’ offer “extends meaningful AI protections.”
“We are disappointed the union has chosen to walk away when we are so close to a deal, and we remain prepared to resume negotiations,” she said.
Andi Norris, an actor and member of the union’s negotiating committee, said that those who do stunt work or creature performances would still be at risk under the game companies’ offer.
“The performers who bring their body of work to these games create a whole variety of characters, and all of that work must be covered. Their proposal would carve out anything that doesn’t look and sound identical to me as I sit here, when, in truth, on any given week I am a zombie, I am a soldier, I am a zombie soldier,” Norris said. “We cannot and will not accept that a stunt or movement performer giving a full performance on stage next to a voice actor isn’t a performer.”
The global video game industry generates well over 100 billion dollars in profit annually, according to game market forecaster Newzoo. The people who design and bring those games to life are the driving force behind that success, SAG-AFTRA said.
Members voted overwhelmingly last year to give leadership the authority to strike. Concerns about how movie studios will use AI helped fuel last year’s film and television strikes by the union, which lasted four months.
The last interactive contract, which expired in November 2022, did not provide protections around AI but secured a bonus compensation structure for voice actors and performance capture artists after an 11-month strike that began in October 2016. That work stoppage marked the first major labor action from SAG-AFTRA following the merger of Hollywood’s two largest actors unions in 2012.
The video game agreement covers more than 2,500 “off-camera (voiceover) performers, on-camera (motion capture, stunt) performers, stunt coordinators, singers, dancers, puppeteers, and background performers,” according to the union.
Amid the tense interactive negotiations, SAG-AFTRA created a separate contract in February that covered independent and lower-budget video game projects. The tiered-budget independent interactive media agreement contains some of the protections on AI that video game industry titans have rejected. Games signed to an interim interactive media agreement, tiered-budget independent interactive agreement, or interim interactive localization agreement are not part of the strike, the union said.
The U.S. economy outpaced expectations in the second quarter of 2024, growing by 2.8%, as reported today by the Bureau of Economic Analysis. This figure is an advanced estimate and subject to revision. The economy had grown by 1.4% in the first quarter. These robust numbers have taken many analysts and experts by surprise, especially considering the Federal Reserve's higher interest rates, which have been gradually impacting the economy with a steady rise in unemployment. The current unemployment rate stands at 4.1%, up from 3.5% a year ago.
Gus Faucher, chief economist at PNC Financial Services Group, noted in a statement to Fast Company, "Overall the advance second quarter GDP report was a very good one. The economy continues to expand at a solid pace even as inflation is slowing. Although higher interest rates are weighing on economic activity to an extent, the U.S. expansion continues and shows no sign of letting up." Remarkably, the gross domestic product (GDP) figures indicate that the Fed might be on the verge of achieving a rare success: controlling inflation without triggering a full-blown recession. Despite a rapid series of interest rate hikes (the last increase occurred last summer), the economy has maintained momentum, and inflation has significantly dropped, with the consumer price index showing a 3% increase in June, down from over 9% in the summer of 2022.
With relatively low unemployment and favorable GDP numbers, it seems that the Fed may be nearing the "soft landing" many had hoped for—an achievement last seen in the mid-1990s. This scenario could set the stage for a potential interest rate cut in the near future, a move that markets and consumers would likely welcome. Despite the strong GDP report and other positive economic indicators, public sentiment remains skeptical about the economy. A recent survey commissioned by Affirm, involving 2,000 Americans, revealed that roughly 60% believe the U.S. economy is in a recession, and many think it began over 15 months ago. Therefore, the perception of a "vibecession" persists, often justifiably, despite what the data portrays.