CA Supreme Court Considers whether Prop 22 is Constitutional

San Francisco, CAProp 22 classifies Uber, Lyft and other app-based drivers as independent contractors instead of employees. Now, after numerous appeals, the California Supreme Court is considering whether the bill is constitutional and over 1 million people in California could be impacted by this California labor decision.

Most Californians recall that Proposition 22 was in response to Assembly Bill 5 back in 2019, which reclassified gig-workers as employees and entitled them to certain employment benefits. Prop 22 was a ballot initiative in California that became law after the November 2020 state election, passing with 59% of the vote and granting app-based transportation and delivery companies an exception to Assembly Bill 5. After Uber and other gig companies spent over $200 million promoting Prop 22 and it became law, their “workers” or “contractors” became eligible for some benefits, such as guaranteed weekly earnings of 120% of minimum wage, health care stipends, and occupational-accident and accidental-death insurance.

But as contractors, app-based drivers are not legally entitled to minimum wages, overtime, sick leave, and other benefits, including important worker compensation. Gig workers argue that Prop 22 doesn’t even provide for a living wage. One gig worker, who has been driving for Lyft for a decade, told ABC7News that Prop 22 “is unconstitutional. We need real rights as gig workers… Prop 22 doesn't offer us overtime, doesn't offer health care, it doesn't offer us many of the things we need as workers.” Another gig worker said "Prop 22 created a law so that the gig companies could create money at the expense and exploitation of gig drivers.”

Prop 22 Lawsuit and Ruling

On May 21, the California Supreme Court heard arguments and asked questions in response to a lawsuit by the service employee's international union (SEIU) and four drivers. They didn’t say how they would rule on Prop 22 but a ruling will be issued within three months.

The nonprofit state news website Cal Matters said the justices were likely to compromise, based on their line of questioning, but other news sites predict that Prop 22 will be upheld.

The main question before the justices is whether Prop 22 conflicts with the state Legislature’s constitutional power to enforce a complete workers’ compensation system. Cal Matters explains that, because of a clause in the initiative declaring gig workers independent contractors not eligible for workers’ comp, the whole law could be thrown out. But the justices didn’t seem to in favor of that. A gig driver, who was in a rally outside the courthouse, said that the justices appeared to be “asking how to modify” Prop. 22 so drivers could qualify for workers’ comp if, for example, the Legislature passed a law that made them eligible. 

The San Francisco Chronicle and Mercury News, however, reported that the California Supreme Court plans to uphold Prop 22.
They reported that Scott Kronland, the lawyer who argued on behalf of SEIU California and four gig workers, said Prop. 22 conflicts with the Legislature’s exclusive and unlimited authority over workers’ compensation. Chief Justice Patricia Guerrero asked whether legislators could restore workers’ comp for gig workers.

Associate Justice Goodwin Liu said there is “still ambiguity there” over voter initiative power, which is supposed to be equal to legislative power: “Does that mean voters cannot act in this field, (workers’ comp), whatsoever?” Kronland responded: The Legislature’s power over workers’ comp is unlimited.

The attorney for the gig companies argued that, “the constitution lets voters act on any subject,” leading to a question from Associate Justice Leondra Kruger: “Could voters by initiative eliminate workers’ comp altogether?” The attorney answered yes, but that “we’re miles away from that.” Uber has argued that “forced employment would be devastating for thousands of drivers and couriers” who work for the app-based company, and “millions of Californians would see major service reductions and cost increases.” 

If Prop. 22 is thrown out entirely, gig companies would need to comply with Bill 5 and could be on the hook to pay employment taxes for their estimated 1.4 million workers around the state, and provide those workers with additional benefits they don’t have now, such as sick pay and overtime, and occupational accident insurance beyond the $1 million coverage limit under Prop. 22. On the gig worker downside if thrown out, many have come to depend on some of its provisions — such as guaranteed earnings of 120% of minimum wage for the time they spend driving or delivering, which they didn’t have before the initiative became law.

John Logan, a SFSU professor of labor and employment, told the news station that the outcome will have national significance. "Everyone is watching what California Supreme Court will decide and whether or not these companies have a right to classify their workers as independent contractors." Stay tuned…