The California Supreme Court has turned off a long-running legal challenge led by unions to overturn a voter-approved initiative that ensures Uber drivers, Instacart shoppers and other gig workers can continue to be treated as independent contractors under California law, allowing those companies to escape a state law that union-backed Democrats hoped to use to force the companies to unionize or be crushed.
On July 25, the state high court unanimously ruled that the initiative, commonly known as Proposition 22, doesn't conflict with the California state constitution because it doesn't improperly constrict the power of California state lawmakers.
“The California Supreme Court ruling is an overwhelming victory for voters’ rights and the integrity of our state’s initiative system,” said Molly Weedn, spokesperson for the Protect Drivers and Services coalition that passed and defended Prop 22. “This ruling is not just a win for the nearly 1.4 million drivers who rely on the flexibility of app-based work to make ends meet, but for millions of consumers and thousands of businesses who rely on app-based services across the state.
Former California Assemblywoman Lorena Gonzalez, now president of the California Federation of Labor, authored the AB5 law that prompted the response from voters under Prop 22.
| Assemblywoman Lorena Gonzalez's website
"The courts have spoken, and this issue can finally be put to rest.”
The challenge to Prop 22 landed in California state court quickly after voters overwhelmingly approved the measure in 2020.
Prop 22 came in response to the state law known as AB5, a union-backed measure that would have redefined so-called gig workers as direct employees and forced the gig companies, like Uber, Doordash, Lyft and Grubhub, to comply with California's voluminous and often punishing labor codes. The law would have placed a host of new requirements on the app-based companies, including workers' compensation, health insurance, paid time off for workers and more.
The companies asserted the requirements of AB5 would have dramatically altered their business model, restricted opportunities to their workers, or put them out of business in California altogether.
In passing AB5 in 2019, however, the state's Democratic legislative supermajority and Gov. Gavin Newsom amended the law to include a host of exemptions for a number of different kinds of "independent contractor" employers, including a range of app-based services.
Lawmakers, however, specifically refused to exempt ridesharing services or food delivery services. In statements about the legislation, lawmakers indicated they did so purposely, in a bid to punish Uber and others like them for allegedly intentionally misclassifying workers as independent contractors.
Critics of AB5 said it was enacted at the behest of labor unions, specifically to allow unions to force the companies to unionize or potentially close up shop in California. AB5's author, former Assemblywoman Lorena Gonzalez, D-San Diego, notably departed the legislature in 2022 for a leadership post in the AFL-CIO labor union.
Uber and food delivery service Postmates have sued over that allegedly improper use of the legislation to target them. However, that legal challenge has failed so far in court, leaving the companies exposed to potential massive financial liabilities for potential violations of California labor law under AB5.
However, any payout would be greatly reduced following the state Supreme Court's decision to uphold Prop 22.
Under Prop 22, California voters explicitly declared that rideshare drivers and app-based food delivery service workers are considered to be independent contractors, regardless of AB5 or any other law that state lawmakers may seek to pass.
Prop 22 would still allow app-based workers to be eligible for some protections, including minimum wage and stipends for health care. But the new measure would take away much of the teeth unions and their allies intended AB5 to have.
After Prop 22 passed, unions and others immediately sued, claiming the measure violated the state constitution.
Alameda County Superior Court Judge Frank Roesch agreed with the unions, and ruled Prop 22 should be invalidated.
On appeal, however, a divided three-justice panel of the First District Appellate Court ruled 2-1 that Roesch was wrong and reinstated Prop 22. That ruling prompted another appeal to the California Supreme Court.
There, the court unanimously upheld the measure.
The decision was authored by California Supreme Court Justice Goodwin Liu.
In their ruling, the state high court agreed with the First District appellate court majority that, under the California state constitution, a vote of the people through the initiative process is just as constitutionally valid as an act of the state legislature.
Specifically, the court said the same powers vested in the state legislature by Article XIV, Section 4, of the California state constitution to create and govern the state's workers' comp system are also vested in the people through the ballot initiative process.
While the unions had argued that section should be read to restrict the ability of voters to overturn state laws that deal with workers' comp, the high court justices noted that section of the state constitution was enacted by amendment in 1918 as "a response to constitutional challenges to the existing workers' compensation system."
"It does not show that the amendment was meant to limit the initiative power in any respect," Liu wrote.
With that determination made, the court said any ruling that would use Article XIV, Section 4, to undo Prop 22's protections for app-based workers under AB5 would "unduly restrict the initiative power" and would give state lawmakers too much power by making some of their laws off limits to the people's initiative countermeasures.
"The power of initiative includes 'the power to abrogate existing [laws]," Liu wrote. "Accordingly, the people may alter existing workers' compensation policy without running afoul of article XIV, Section 4."
The justices, however, noted they agreed that Prop 22 should not be read, at this point, to prevent state lawmakers from passing new legislation to attempt again to extend workers' comp rules to independent contractors.
They noted that Prop 22 included language indicating any attempt by lawmakers to force workers' comp rules on app-based drivers could need to also be approved by voters. But the justices said that question will need to wait for future court cases.
In addition to Protect Drivers and Services, the ruling was hailed by other pro-business groups, including the U.S. Chamber of Commerce.
"Today's decision by the California Supreme Court is a win for workers who choose independent contracting for its greater work-life balance, flexibility, and the opportunity to be their own boss," said U.S. Chamber of Commerce Employment Policy Division Senior Vice President Glenn Spencer.
"And it’s a win for California consumers who benefit from services provided by independent workers and digital platforms."
The U.S. Chamber had filed a brief at the California Supreme Court in support of Prop 22.
The California Chamber of Commerce, which also backed Prop 22, also cheered the decision.
In a statement posted to the social media platform X, formerly known as Twitter, the California Chamber said: "Today's ruling upholding #Prop22 supports the will of CA voters, protects #CAJobs and is a big win for our economy. Workers want the flexibility of app-based jobs and consumers benefit from the services they provide."
Prop 22 opponents lamented the decision.
In a statement, Lorena Gonzalez, the author of AB5 who now serves as president of the California Federation of Labor Unions, said:
“We are deeply disappointed that the state Supreme Court has allowed tech corporations to buy their way out of basic labor laws despite Proposition 22’s inconsistencies with our state constitution. These companies have upended our social contract, forcing workers and the public to take on the inherent risk created by this work, while they profit.
"AB5 granted virtually all California workers the right to be paid for all hours worked, health and safety standards, unemployment insurance, workers compensation, and the right to organize. Rideshare and delivery drivers deserve those rights as well."
In a statement posted by Protect Drivers and Services, one of those workers, Stephanie Whitfield, identified as a Coachella Valley-based Instacart shopper, said gig workers do not want to see such opportunities taken away.
“As an app-based driver, today’s ruling is a huge sigh of relief and a win for California,” said Whitfield.
“For years, special interests have been trying to take away our ability to remain independent contractors, despite voters overwhelmingly approving the law and drivers continually favoring the flexibility Prop 22 has allowed. I am so grateful to the tens of thousands of drivers like me who have tirelessly advocated over the years and to the California Supreme Court for doing the right thing," Whitfield said.