Uber and Lyft gig worker win overturned: You're a contractor, Harry

'Today's ruling certainly isn't going to stop us' says campaigner

Local gig workers got some bad news yesterday: a bid to overturn California's Prop 22 failed in the appeals court, a major win for Uber and other companies who sell rides and deliveries in their cars.

Uber and Lyft contributed to lobbying funds of more than $225 million in 2020 campaigning for Proposition 22 – a voter law that passed in November allowing companies to classify gig drivers as "independent contractors" rather than staff.

Worker groups and some of the drivers opposed the measure, claiming it was effectively rewriting labor law through the proposition process (where voters are balloted on a law) and meant they couldn't access rights to sick leave, minimum wage, overtime pay, unemployment compensation and state workers' compensation, nor the ability to have set, regular hours.

The gig companies claim the proposition provides their employees freedom to work when they please as well as giving some benefits, including occupational accident insurance. Lyft said in a statement on the news that the proposition "protects the independence drivers value and gives them new, historic benefits," adding that it was "excited to continue operating our service with no changes."

Yesterday's ruling reverses California Superior Court Judge Frank Roesch's August 2021 decision that the Prop 22 was "constitutionally problematic."

The case, Hector Castellanos, et al v California, was launched by a group of Uber and Lyft drivers along with the Service Employees International union shortly after Proposition 22 was passed in 2020. Among other things, the original complaint alleged the company was illegally coercing its drivers to support the ballot measure that sought to keep them classified as independent contractors.

Yesterday's panel upholding the state law was divided. Only two of the three justices found California allowed both the legislature and voters "lawmaking authority" over workers' compensation in the ruling [PDF].

Dissenting Justice Jon B Streeter said he thought Prop 22 should be invalidated "in its entirety" because it "presents a direct conflict between the voter electors' power to adopt initiative statutes and the legislature's power."

In a silver lining from the drivers' point of view, the justices struck down a clause of the proposition that put restrictions on collective bargaining by workers – but the main takeaway is that the companies can continue to treat ride-share drivers and Doordash deliverers as contractors in California, and could help these companies hang onto that model elsewhere in the US.

"The mere classification of drivers as independent contractors is not determinative of their ability to collectively bargain," the justices said, adding that allowing the anti-union clauses in the law – section 7465(c)(3) and (4) – "would encourage gamesmanship and reward initiative proponents for drafting confusing, or even outright misleading, initiatives."

An appeal to the California Supreme Court by the plaintiffs is likely.

Gig Workers Rising leader Jason Munderloh commented on the ruling in a statement: "Uber's vision for the future of work is a nightmare for the rest of us – one where they can cut our pay anytime, fire us with no explanation, and abandon us if we get injured. Our vision is one where we're all paid enough to cover the bills, have time to spend with our families, and have real freedom in our jobs. We're seeing drivers all around the nation organizing for our vision, and today's ruling certainly isn't going to stop us."

Munderloh cited initiatives underway including the Gig Work Transparency bill, which aims, among other things, to mandate that tech companies make public how much drivers earn on each ride and what the business's take is – not just to the drivers themselves but also to the consumer.

We've asked the Service Employees International union and Uber for comment.

Elizabeth Jarvis-Shean, veep of Communications and Policy at Doordash said:

"Today's decision is a huge victory for Dashers and for the voters who overwhelmingly supported Prop 22. The core of Prop 22 has been upheld as the law of the land in California and Dashers will maintain their ability to work independently and access historic protections and benefits. This landmark law has now been affirmed at the ballot box and in the courtroom, and the special interests working to overturn the will of 10 million California voters should rest their case."

The gig companies' shares all rose on the news, with Uber up nearly 6 percent, Lyft up 5 percent, and DoorDash up about 7 percent premarket this morning. ®