Late Friday's ruling by a judge ruled unconstitutional an app-based company law that would have allowed drivers to be treated as contractors in California. This was after a record-breaking campaign.
Uber Technologies Inc. UBER, +0.23% , Lyft Inc. LYFT, -1.92% , DoorDash Inc. DASH, +1.11%, Instacart, and other app-based businesses funneled over $200 million to support Proposition 22, which prohibited them from treating drivers like employees under state law. Although the proposition was approved by more than 58%, Frank Roesch, California Superior Court Judge, ruled it violated the state constitution. He said that the Legislature had been unfairly limited in its ability to negotiate workers' compensation and collective bargaining.
Judge X concludes that Proposition 22 in its entirety is invalid.
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Protect App-Based Drivers & Services Coalition spokesmen said they would appeal the decision and that the ruling will be stayed once they file. This would preserve Prop. 22 rules in force while the appeal is being processed through the system.
Geoff Vetter, the spokesman for the court, stated in an email that the judge committed a grave error by failing to consider a century of case law that required courts to protect the voters' right of initiative. This shocking decision is a slap in the face to the vast majority of California voters who voted for Prop. 22.
Prop. has been used by Lyft, Uber and other gig businesses. Prop. 22 is a good example of new regulation in the U.S., with a recent attempt to create similar rules in Massachusetts. Companies are trying to create a third route for employment in which drivers will be treated as contractors and offered some benefits, subject to certain conditions.
These rules were retained in California law to exclude app-based workers from systems like workers compensation and unemployment insurance. Gig companies don't pay into these systems for drivers. Some of them received unemployment assistance from the federal government relief package during the COVID-19 pandemic.
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Roesch concluded that the California Legislature has the final say in determining the course of workers' compensation in California, despite the extensive power given to voters by propositions. Roesch also stated that an amendment would prevent the Legislature from authorizing collective bargaining for workers who use apps in the future.
Roesch stated that a ban on legislation authorizing collective bargaining for app-based drivers does nothing to promote the right of independent contractors, or protect work flexibility, nor does this provide minimum workplace safety standards and pay standards for these workers. The legislation appears to only protect the economic interests and ununionized workforce of network companies, which is not the stated goal.
Catherine Fisk, a professor of labor law at UC Berkeley, stated to MarketWatch that the prohibition on future unionization could be appealed.
She stated in January that none of the materials explaining the implications of the proposition informed voters that they were voting to stop drivers unionizing and to prevent legislators from allowing them unionize. It is a significant change in law, and it is hidden at the end.
The lawsuit was filed by gig workers and labor unions in January. However, the state Supreme Court denied a request to expedite the review. Plaintiffs are the SEIU California, the national SEIU and individual drivers.
