Court: Drivers can still be contractors
A 2020 ballot measure that classified hundreds of thousands of drivers for Uber, Lyft and other ridehailing and delivery companies as contractors rather than employees was within the voters’ power in nearly all respects, a state appeals court ruled Monday, overturning a judge’s ruling that had struck down the initiative.
Proposition 22 was approved by 59 percent of California voters in November 2020 after a $200 million campaign by the companies. While its sponsors contended it gave drivers the freedom to define their jobs and work for multiple companies, it also deprived them of the right to employee benefits — such as minimum wages, workers’ compensation and the right to form unions — that are not legally required for independent contractors.
Alameda County Superior Court Judge Frank Roesch declared Prop. 22 in violation of the state Constitution in August 2021. He cited the state Constitution’s authority for the Legislature to grant workers’ compensation, and also noted that the measure made it virtually impossible for drivers to organize unions. That was a different subject than the measure’s declared intent to protect workers, violating the Constitution’s limitation of initiatives to a single subject, Roesch said.
But the First District Court of Appeal in San Francisco ruled Monday that the state’s voters, by initiative, have the same power as the Legislature to regulate workers’ compensation or other conditions of employment.
“The people may exercise their initiative power in a way that limits the Legislature’s authority,” Justice Tracie Brown wrote in the 2-1 ruling. In this case, she said, the voters, like lawmakers, had the power to exclude the drivers from workers’ compensation.
Brown said one part of Prop. 22 violates the Legislature’s constitutional authority, a provision requiring a seven-eighths (87.5 percent) legislative majority to amend any part of the ballot measure — and accompanying language that barred any legislative amendment that affected the drivers’ status as contractors or allowed them to organize unions, effectively banning any action by state lawmakers.
But she disagreed with Roesch’s conclusion that the seven-eighths vote requirement addressed a different subject than the rest of Prop. 22, a finding that would invalidate the entire initiative.
The ballot measure’s overall subject was to strike “a new balance of benefits and obligations for app-based drivers,” Brown wrote, and the restriction on amendments, though illegal, addressed a similar subject “because it relates to drivers’ ability to change that balance by limiting the Legislature’s authority to authorize collective bargaining.”
Justice Stuart Pollak joined Brown’s opinion. In dissent, Justice Jon Streeter noted that Prop. 22 was passed as a statutory initiative — not a state constitutional amendment, which would have required more petition signatures — and said such a ballot measure cannot repeal the Legislature’s constitutional authority over workers’ compensation.
This initiative is “the first attempt in the history of California workers’ compensation to drop a class of wage workers in one industry entirely from the workers’ compensation system,” Streeter wrote. He said the private benefit program for out-of-work drivers in Prop. 22 lacked such basic protections as health and safety coverage and vocational training, and contradicted AB5, legislation passed in 2019 to reaffirm the drivers’ status and benefits.
“I believe the voter electors were required to respect what the Legislature had done,” and Prop. 22’s defiance of legislative authority rendered the entire measure unconstitutional, Streeter said.
The ruling was hailed by Uber.
“Today’s ruling is a victory for app-based workers and the millions of Californians who voted for Prop 22,” said Tony West, Uber’s chief legal officer, in a statement. “Across the state, drivers and couriers have said they are happy with Prop 22, which affords them new benefits while preserving the unique flexibility of app-based work.”
Uber, Lyft and others have continued to apply Prop. 22 despite Roesch’s ruling, so Monday’s decision doesn’t change things much on the ground.
Labor-backed organizations that challenged Prop. 22 in court were not immediately available for comment. They are likely to appeal the ruling to the state Supreme Court.