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Gig Workers Score Big Legal Win in Golden State

OAKLAND, Calif.— A California judge ruled August 20 that the state ballot initiative that defines app-based taxi and delivery drivers as independent contractors is unconstitutional — but there is likely to be a long legal battle over it.

Bay Area Uber and Lyft driver Hector Castellanos.

Alameda County Superior Court Judge Frank Roesch, ruling on a lawsuit filed by four drivers and the Service Employees International Union, held that Proposition 22, the initiative approved by voters last November, violated the state constitution for two reasons. 

First, the ballot measure, which effectively nullified a 2019 state law that set strict standards for when workers can be deemed independent contractors instead of employees, was incompatible with a clause in the constitution that gives the legislature “unlimited” power to create workers’ compensation laws. Independent contractors are not eligible for workers’ compensation, so the initiative protected gig-economy companies from having to pay into the state’s workers’ compensation fund.

Second, Proposition 22 prohibited California from enacting laws enabling app-based drivers to form unions, unless they were passed by a seven-eighths majority in both houses of the legislature. That provision was “utterly unrelated” to its stated purpose and thus violated the constitutional requirement that initiatives have only a single subject, Judge Roesch said.

“A prohibition on legislation authorizing collective bargaining by app-based drivers does not promote the right to work as an independent contractor, nor does it protect work flexibility, nor does it provide minimum workplace safety and pay standards for those workers,” he wrote. “It appears only to protect the economic interests of the network companies in having a divided, ununionized workforce, which is not a stated goal of the legislation.”

“The gig industry spent more than $200 million to create a law for its own benefit that denied drivers rights under the law in California and made it nearly impossible for lawmakers to fix these problems,” SEIU California President Bob Schoonover told an online press conference August 23. “The attempt by Uber, Lyft, and others to circumvent our democracy has failed.”

“Proposition 22 stripped us of our basic rights as workers,“ said Lyft driver Michael Robinson, a plaintiff in the suit from Loma Linda in the far eastern suburbs of Los Angeles. 

The issue was personal for plaintiff Hector Castellanos, an Uber and Lyft driver in the Bay Area. After he was injured when another driver hit him and needed surgery, he said, he had to stop working for a year. He didn’t have health insurance and couldn’t get workers’ compensation because he was an independent contractor, so his 19-year-old daughter had to drop out of college to help support the family.

The gig corporations promised to give drivers access to health coverage if the initiative passed, he added, but they “make it really difficult for us to even apply for a health-care stipend.”

The decision, however, is likely to face a long legal battle before it goes into effect. The Alameda County court first has to enter it into judgment to make it official, said Scott Kronland, a San Francisco attorney who represented the drivers and the SEIU in the suit. It is expected to do that later this week. 

But both Uber and Lyft have said they plan to appeal, which would almost certainly include seeking a stay to prevent the ruling from going into effect before the appeal is decided.

An appeals-court decision would not come for several months, Kronland said. If Protect App-Based Drivers and Services — the industry front group that is a defendant in the suit, along with the state of California —loses, it would likely appeal to higher courts.

“We think the judge’s decision is very solid and will be upheld,” Kronland stated. “There are several ways in which the drafters of the initiative overreached.”

Schoonover compared Proposition 22 to two previous California ballot initiatives that were held unconstitutional by the courts: 1994’s Proposition 187, which would have prohibited undocumented immigrants from using public services, including sending their children to public schools; and 2008’s Proposition 8, which outlawed same-sex marriage. In both cases, it took five years before the decisions voiding them became final.

Whether the app companies obey the decision is another issue. The 2019 law, Assembly Bill 5, established an “ABC test” to determine whether a worker is genuinely an independent contractor: They would have to be working without being controlled by the hiring entity, doing work “outside the usual course” of its business, and have a genuine independent business doing that kind of work. 

When the law was passed, Uber responded that it would not reclassify drivers as employees, because their work is “outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces.”

In May 2020, then state Attorney General Xavier Becerra filed a lawsuit against Uber and Lyft, charging that they were continuing to misclassify drivers as independent contractors, on the grounds that providing taxi service was part of the companies’ core mission.

“The gig companies have always refused to follow the law,” said SEIU California executive director Alma Hernandez. “The impact on the drivers will be what the app companies — Uber, Lyft, and DoorDash — choose to do.”

Meanwhile, she said, drivers will continue to mobilize, and the SEIU will support them.

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