Millions of dollars were spent by rideshare and food delivery companies to ensure Proposition 22 (“Prop 22”) was passed by Californians last November 2020. This ballot initiative was passed by a wide margin and provided an independent contractor exception for “app-based” drivers. However, on August 20, 2021, a California Superior Court judge found the voter-approved Prop 22 unconstitutional and therefore, unenforceable.
Prop 22 is a California ballot initiative that classified app-based drivers as independent contractors rather than employees. This measure was a direct response to Assembly Bill (AB) 5, which introduced stringent guidelines for classifying workers as independent contractors. As a result of AB 5, app-based drivers were generally not classified as independent contractors. Prop 22 was specifically designed to circumvent California employment law, and AB 5, by creating an exception for app-based drivers. California has been pushing for independent contractors to be classified as employees, arguing that workers with employment status receive more protections and benefits such as health insurance, sick leave, and minimum wage. Proponents of Prop 22 argue that an employee classification of app-based drivers will restrict the work flexibility offered to app-based drivers and that a majority of app-based drivers do not want to be classified as employees.
The August 20th decision, written by California Superior Court Judge Frank Roesch, stems from a petition filed by labor union Service Employees International Union and a handful of app-based drivers requesting the court to hold Prop 22 unconstitutional. Petitioners, in support of their petition, argued that by exempting workers previously classified as employees from workers’ compensation, Prop 22 infringes on the Legislature’s plenary power to create a complete system of worker’s compensation.
Judge Roesch agreed with the petitioners and said that Prop 22 in its entirety is unenforceable because it “limits the power of a future legislature to define app-based drivers as workers subject to workers’ compensation law,” rendering all of Prop 22 unenforceable. The judge, expressing his criticism of Prop 22, said it “appears only to protect the economic interest of the network companies in having a divided, ununionized workforce.” He went on to state that “a prohibition on legislation authorizing collective bargaining by app-based drivers does not promote the right to work as an independent contractor, not does it protect work flexibility, nor does it provide minimum workplace safety and pay standards for those workers.”
Although companies like Uber, Lyft, and DoorDash received a major blow in their battle with the State of California over the independent contractor versus employee status of their respective drivers, Prop 22 will remain enforceable law while Judge Roesch’s ruling is appealed to the Court of Appeals. There is a strong likelihood that this issue will eventually reach the California Supreme Court, who will be the final arbiter in this ongoing battle between ride share and food delivery companies and the State of California.