In a major victory for gig-work companies, the California Supreme Court today upheld a voter-approved law that allows Uber and other app makers to treat their drivers and delivery workers as independent contractors instead of employees.
The decision on Proposition 22 was unanimous. Approved by 58% of California voters in 2020 and enacted the same year, Prop. 22 gave app-based gig workers some benefits but not full worker protections because the ballot initiative 鈥� which gig companies spent more than $200 million to pass 鈥� ensures they are not considered employees.
More than 1.4 million Californians are app-based gig workers for companies such as Uber, Lyft, DoorDash and Instacart, according to the industry鈥檚 latest estimates.
The court was not considering the pros and cons of the gig economy. During in San Francisco, justices zeroed in on whether Prop. 22 was incompatible with California law, which gives the Legislature responsibility over a complete workers鈥� compensation system. By declaring gig workers independent contractors, Prop 22 made them ineligible for workers鈥� comp benefits. SEIU California, the Service Employees International Union that had sought to overturn the law on behalf of four gig workers, argued that this made the law unconstitutional.
The law about the Legislature and worker鈥檚 comp 鈥渄oes not preclude the electorate from exercising its initiative power to legislate on matters affecting workers鈥� compensation,鈥� Justice Goodwin Liu wrote in today鈥檚 ruling.
Liu also wrote that a section of Prop. 22 鈥渄oes not itself restrict the Legislature鈥檚 authority to enact workers鈥� compensation legislation.鈥�
Scott Kronland, the attorney who argued the case on behalf of SEIU California, told CalMatters that the ruling 鈥渆xpressly leaves open the possibility of legislation that provides worker鈥檚 compensation benefits for app drivers.鈥�
Still, advocates for gig workers said the ruling was a blow.
This is a really tragic outcome,鈥� said Veena Dubal, a law professor at UC Irvine who focuses on labor and inequality. 鈥淏ut it鈥檚 not the end of the road.鈥� Dubal speculated that labor advocates could put together a proposition of their own, or municipalities and the state could adopt ordinances and laws that are more worker-friendly 鈥� such as making it illegal to set different wages for similar work based on algorithmic formulas.
Gig companies backed Prop. 22 in 2020 to win themselves an exclusion from a new state law known as Assembly Bill 5, which would have upended their business models by requiring them to consider their drivers and delivery workers as employees. Last month, 鈥� meaning only Prop. 22 stood in the way of forcing ride-hailing and delivery app companies to comply with it.
William Gould, professor emeritus at Stanford Law School and a former chairman of the National Labor Relations Board, called the ruling 鈥渁n enormous setback for workers who are marginalized.鈥� Gould added that 鈥渃ompanies showed this is the way to repeal what the Legislature does: using an expensive, well-financed campaign to deny worker rights.鈥�
Under Prop. 22, gig workers are promised guaranteed minimum earnings of 120% of minimum wage, health care stipends, occupational accident insurance and accidental death insurance. Many of the benefits come with stipulations:
- The guaranteed earnings are based on time on a 鈥済ig鈥� and don鈥檛 include time workers spend waiting for a ride or delivery.
- The health care stipends are for certain eligible workers only, excluding those who qualify for public assistance, including Medi-Cal.
- The occupational accident insurance has a $1 million limit
- Gig workers are reimbursed for their mileage, although at less than the IRS-mandated rate employees receive 鈥� currently 35 cents a mile vs. 67 cents a mile. But this amount is included in the minimum earnings guarantee 鈥� it is not in addition to it.
- Because Prop. 22 will stand, app-based platform workers will continue to be ineligible for benefits such as sick pay, a minimum wage for all time worked, unemployment insurance and more.
Representatives of Uber, DoorDash and Instacart sent statements hailing the decision as a win for gig workers and for California voters.
Molly Weedn, spokesperson for the gig industry group Protect App-Based Drivers + Services, called the ruling 鈥渁n overwhelming victory for voters鈥� rights and the integrity of our state鈥檚 initiative system.鈥�
A driver in Coachella Valley who participated in the industry group鈥檚 press conference today, Stephanie Whitfield, said she has relied on her income from driving to supplement her substitute-teaching income, especially after having major back surgery.
鈥淚 needed something I could work around my doctor鈥檚 appointments,鈥� Whitfield said. 鈥淎pp-based driving has been invaluable to me.鈥�
But other gig workers said Prop. 22 has not helped them much. They said their wages have stayed low and their benefits fall short of what they want.
Sergio Avedian, a ride-hailing driver, podcaster and contributor at the Rideshare Guy, a popular gig-work blog, said the ruling means 鈥渢he hunger games continue鈥� it means (only) a small percentage of drivers receive (Prop. 22) benefits due to restrictions.鈥�
Another driver, Alejandro Partida, said during a press conference by Los Angeles-based Rideshare Drivers United: 鈥淲e鈥檝e seen how (Prop 22) it harms workers鈥� who are mostly immigrants and people of color. (We) are entitled to worker protections just like other employees.鈥�
Gig worker advocates vowed not to give up.
鈥淲e鈥檒l continue to fight until we have justice for drivers and all workers,鈥� Nicole Moore, president of Los Angeles-based Rideshare Drivers United, told CalMatters. Moore added that this ruling could mean 鈥渁pp companies are coming for all of our jobs, whether it鈥檚 in health care, construction, entertainment.鈥�
Moore said during the press conference: 鈥淲e need the help of legislators, the attorney general, of cities to find a creative pathway to ensure that drivers have adequate pay for our families.鈥�
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