Proposition 22 Ruled Unconstitutional by California Judge

Alameda County, CASections of Proposition 22—which went into effect last November-- are in violation of California’s  constitution and therefore unenforceable, ruled an Alameda County Superior Court Judge. The ruling has gig economy investors worried and California labor advocates jubilant.

The ballot measure hasn’t practiced what it preached, namely not providing gig company workers with certain benefits such as health care subsidies and safety measures. Independent workers—drivers who worked for Uber, Lyft and other service app-based companies-- are left with “vulnerability to health and safety risks as well as feelings of confusion and disillusionment," according to a National Equity Atlas report. Eliza McCullough and California State University San Marcos professor Brian Dolber wrote that drivers have been stripped of basic employment rights, including health-care benefits, an hourly minimum wage, and health and safety standards. Further, Prop 22 is “the most dangerous law to workers” and the most radical undoing of labor legislation since Taft-Hartley in 1947 (the law that debilitated the power granted to unions by the New Deal), which dramatically restricted unions.

In November 2020, the Nation.com reported that Prop 22 “will create a growing precariat of people who work very hard and are not able to survive off of their earnings. And it will have an impact on American politics for decades, if not the next century.”

In the case Hector Castellanos, et al. v. State of California, et al., Case Number S266551 (Alameda County Superior Court),Judge Roesch determined that Proposition 22 was unconstitutional and unenforceable under California law because it

• Infringes on “Workers Compensation”
• Restricts Amendment by the Legislative
• Violates the Single-Subject Rule

Read the case details here. The app-based rideshare companies who backed Proposition 22 say they will appeal the ruling.

Prop 22 At Stake for Investors and Workers

After Prop 22 was passed, after the campaign cost of more than  $200 million, investors saw Uber’s stock increase exponentially. “Going forward, you will see us more loudly advocate for new laws like Prop 22.… it’s a priority for us to work with governments across the US and the world to make this a reality,” said Uber CEO Dara Khosrowshahi. “Prop 22 settled the question of driver independence, but we know there is more work to be done,” said Lyft president John Zimmer, and it was “time for peace” between the corporations and labor.

If Prop 22 is dead in the water, the gig economy will be less profitable for investors and more profitable for workers.
The ballot measure promised to protect gig economy contractors' freedom to work independently. Benefits included setting an earnings floor, providing health care subsidies, mandating business cover injuries incurred on the job, and providing safety measures like sexual harassment policies, but also denying gig workers the full scope of employment rights and protections.

To determine the impact of Prop 22 on its member drivers, Rideshare Drivers United surveyed drivers who worked for Uber, Lyft and food delivery service app-based companies between May and June of 2021. According to Law360, almost half the drivers who took the survey say they didn't realize or were never informed they were able to obtain stipends to subsidize health care. And the above report by McCullough and Dolber found Latinx drivers even less likely to have been informed of their right to a stipend.

The workers' lobbying group said that Prop 22's specifications regarding who can qualify for health care means many are kept from receiving stipends. “Any driver enrolled in Medicare or the state public health care service is disqualified from receiving health care stipends, as are drivers who fail to hit the minimum amount of hours per-week working on the app, or do not have health insurance,” reported Law360.

Rideshare Drivers United further reported the safety measure alternatives to employee workplace protections were also insufficient.  Most all the survey respondents said that they'd never been part of a safety training. But Prop 22 was supposed to provide trainings to address driver safety, crash-prevention, food safety information for food-delivery gig workers, and a training on identifying and explaining how to report sexual harassment and assault.

Prop 22 vs. AB5

If Prop 22 doesn’t go into effect, AB5 will go into effect. This means that gig economy drivers will be entitled to be paid the minimum wage; they will be entitled to be paid overtime if they work more than 40 hours a week; they'll be entitled to protection against discrimination and they'll be entitled to workers compensation benefits if they're injured. Overall, minimum standards for drivers will be improved. It ain’t over til it’s over…