Uber's middle way with gig workers gets dinged

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Travelers arriving at Los Angeles International Airport look for ground transportation in Los Angeles, Aug. 20, 2020. REUTERS/Mike Blake

WASHINGTON, Aug 23 (Reuters Breakingviews) - Uber Technologies' (UBER.N) effort to avoid treating drivers as employees has hit a pothole read more . A California Superior Court judge said on Friday that a measure affecting gig-economy workers approved by the state's voters is unconstitutional because it limits the power of California's legislature.

Nearly 60% of Golden State voters last year approved Proposition 22 , which exempted certain companies from having to recognize drivers as full-on employees provided they get some benefits like healthcare. That's a middle way that allows Uber, smaller rival Lyft (LYFT.O), food-delivery app DoorDash (DASH.N) and grocery service Instacart to avoid higher costs . Similar initiatives are under way elsewhere, like in Massachusetts.

The new ruling puts that effort on a shakier footing. It will be appealed to higher courts and, for now, Prop 22 remains in effect. But President Joe Biden’s pro-labor administration presents another hurdle, while in May Uber for the first time recognized a trade union to represent drivers read more . Gig-economy employers may yet lose their cut-price ride. (By Gina Chon)

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Editing by Richard Beales and Marjorie Backman

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