The U.S. Supreme Court on Monday allowed workers in California to join together and sue their employers for alleged violations of the state's labor laws, two years after the Supreme Court appeared to dismiss such lawsuits.

The judges declined to consider appeals by ride-hailing companies Uber and Lyft against state appeals court rulings that allow drivers to sue the companies on behalf of the state because they classify them as independent contractors rather than employees.

Even if the lawsuits were successful, one million Uber and Lyft drivers in California would not be classified as employees because voters approved a 2020 initiative supported by the companies that declared their drivers contractors. That initiative, Proposition 22, is being challenged in the state Supreme Court, which was likely to uphold it at a hearing last month.

But the drivers in Monday's cases filed their lawsuits in 2018 and could still have the right to seek penalties from the companies until Prop. 22 passes in November 2020. More importantly, for other workers in California, the Supreme Court left open the option to file lawsuits against their employers under a unique state law: the Private Attorneys General Act (PAGA).

Since 2004, workers have been able to sue employers individually or collectively on behalf of the state if they violate laws such as minimum wage, overtime, sick pay, or meal and rest breaks. If a lawsuit is successful, workers receive 25 percent of the penalties provided for under labor law, and the state receives 75 percent.

In June 2022, the U.S. Supreme Court ruled 8-1 that PAGA violates the rights of companies whose contracts require workers to take disputes to arbitration rather than going to court, a common practice among large companies. Arbitration panels' decisions are virtually unchallengeable, and studies have found that they typically favor employers, their regular customers.

However, the final interpretation of state law rests with California courts, and since 2022 they have ruled that while employees are bound by arbitration agreements in their individual cases, they can still join forces with coworkers and sue their employer under PAGA.

In Monday's cases, the first to go before the U.S. Supreme Court, the justices declined to review appeals by Uber and Lyft of Los Angeles state appeals court rulings that allowed lawsuits against the two companies to proceed. Still pending is an appeal by Uber of a California Supreme Court ruling last July that unanimously allowed employees to sue under PAGA.

“The California courts have refused to follow this Court's instructions,” Theane Evangelis, a lawyer for Uber, wrote in a brief urging the justices to grant review and overturn the state court's decisions. She said the state legislature and its courts have been “particularly inventive in coming up with new devices and formulas that undermine arbitration agreements.”

But Nicolas Sansome, an attorney for the drivers, said Monday that “these cases were based solely on questions of state law and the U.S. Supreme Court has no jurisdiction to decide questions of California law.” He said the ride-hailing companies “hate being held accountable for violations of the state's labor laws.”

State business associations, meanwhile, have approved an initiative for the November ballot that would repeal PAGA. It would allow workers to file complaints about labor law violations with a state agency — but not with the courts. It would also impose higher penalties for violations, but would not cover attorney fees.

Reach Bob Egelko: [email protected]; Twitter: @BobEgelko