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The companies have been battling with regulators over how they compensate and grant more benefits including insurance and sick leave to their gig workers, who have the flexibility of working for any app they choose to but do not receive the same legal protection as employees.
Shares of Uber Technologies and Lyft Inc rose in premarket trading on Tuesday following a California court's ruling on treating drivers as independent contractors rather than employees, removing some future regulatory risks for the rideshare companies.
A three-judge panel of the state appeals court on Monday reversed a lower court ruling in 2021 that the ballot measure, known as Proposition 22, was unconstitutional.
Prop 22 was approved in November 2020 and exempted app-based drivers from a 2019 state law known as AB5 that makes it difficult to classify workers as independent contractors rather than employees.