A California Supreme Court Judge has struck down Proposition 22 – also called the Gig Workers Law – ruling it unconstitutional.
The most vocal proponents of Proposition 22 were owners of the state’s “ride-haul” companies such as Uber and Lyft. Prop 22 language also includes freelancers who are called “gig economy workers.” Uber and Lyft spend more than $200 million in support of Prop 22.
In a nutshell, Prop 22 allowed companies to avoid classifying ride-haul drivers and other freelancers as employees.
Judge Rules Proposition 22 in California is Unconstitutional
California Supreme Court Judge Frank Roesch ruled that Proposition 22 illegally “limits the power of a future legislature to define app-based drivers as workers, subject to workers’ compensation laws.”
Judge Roesch ruled that Proposition 22 was illegal from the start because it went against the state constitution.
The California constitution gives its legislature the authority to provide a workers’ compensation system. The Judge ruled that a new statute could not be approved if it removed that element of the constitution.
Small Business Deals
In November 2020, California voters (58%) approved Proposition 22. Proposition 22 exempted companies such as Uber and Lyft from having to classify their workers as employees.
Uber and Lyft drivers, along with other gig workers throughout California, would instead be independent contractors. Owners of ride-haul companies supported the bill because they did not want to consider gig drivers and delivery workers as employees.
Labor organizations, such as Service Employees International Union (SEIU) opposed Prop 22.
Not Just Ride-Haul Drivers Affected
Proposition 22 included Ride-Haul drivers, such as Uber and Lyft, and other “gig economy workers.” The measure provided that Ride-Haul drivers and gig economy workers would be provided minimum hourly earnings and health care subsidies.
Gig Economy Workers are described as workers who have agreements to provide work or services for a company or its clients. Gig Economy Workers include independent contractors, online platform workers, contract firm workers, on-call workers, and temporary workers.
Prop 22 did not require employers to include ride-haul drivers and gig economy workers in a workers’ compensation program or protect their right to organize.
January 2021 Ride-Haul Drivers and SEIU Sue California
In January 2021, SEIU joined with Uber and Lyft drivers and sued to overturn Prop 22.
The main points stated in the lawsuit were:
- Workers have a fundamental right to bargain for pay and organize.
- Workers should not be excluded from a workers’ compensation program.
What’s Next for Proposition 22?
Proposition 22 was written so that it would withstand challenges. Its language includes a requirement that a 7/8ths vote of state legislature is needed to make any modifications.
Now that a California Supreme Court Judge has ruled Prop 22 unconstitutional, what’s next? California appears headed for another ballot initiative.
Earlier this month, Lyft and Uber introduced a copycat Prop 22 bill in Massachusetts.
More on Prop 22 and Gig Economy in California
In 2019, California legislators passed Assembly Bill 5 (AB5). AB5 required companies to classify ride-haul drivers and other gig-economy workers as employees.
Companies were to classify all workers as employees unless they could prove that the workers:
- Are not directed or controlled by the company during their work time
- Are not performing the company’s “core” business
- Have their own business doing that type of work
Ride-Haul companies including Lyft and Uber refused to abide by AB5. The companies stated that they wanted to keep drivers classified as independent contractors.
In August 2020, the California court gave Uber and Lyft 10 days to comply. The companies responded by stating they would shut down their operations.
At the end of the 10 days, the companies asked for a time extension. The court granted an extension until November 4, 2020.
During the November 3, 2020 ballot election, California voters approved Proposition 22.