California regulatory agency for transportation formally rules that it considers Uber and Lyft drivers as employees of those companies under AB5 state law
OAKLAND, Calif. —The California Public Utilities Commission, the state government body responsible for licensing and regulating … Source: San Francisco Chronicle .
Context & Ripple Effects
This ruling is the latest escalation in a five-year fight over driver status. Back in 2015, the [[a:830218|California Labor Commission already found Uber drivers to be employees rather than contractors]]; AB5 then codified stricter criteria statewide, and Uber spent early 2020 building contractor-friendly features like favoriting to defend its model as the law took effect in January.
Now the California Public Utilities Commission — the body that licenses ride-hail services — has formally weighed in on the employee side, giving the attorney general fresh ammunition days before reports that the state planned an injunction to force reclassification of drivers before any full case is heard.
First-order effects
- Uber and Lyft face immediate legal exposure on their home turf: with a licensing regulator now on record that drivers are employees under AB5, the AG's threatened injunction moves from theory toward enforcement.
Second-order effects
- Both companies keep adapting product mechanics instead of conceding status — Uber had already let Southern California and Sacramento drivers set their own fares above or below platform rates as a counter-argument to AB5's employee test.
- The courtroom pressure channels into the ballot box, where Prop 22 gives voters a direct route to exempt app-based drivers from AB5 even as appeals courts uphold orders to stop classifying drivers as contractors.
Third-order effects
- If the pattern holds — agency rulings, injunctions, and appellate orders stacking up while voters get the final say — gig-work classification becomes a standing political contest rather than a settled legal question, with each company's labor costs in California hinging on election outcomes.
The trend: Ride-hailing driver classification in California is shifting from case-by-case rulings into a durable court-versus-ballot fight over whether gig platforms can exist outside employment law.