California Supreme Court upholds classification of gig workers as independent contractors

Ride-share companies scored a victory in the California Supreme Court, allowing them to continue classifying gig workers as independent contractors rather than employees. Uber, Lyft, DoorDash and other gig-economy companies invested around $200 million in the passage of Proposition 22, which voters approved in 2020. The state’s highest court rejected a legal challenge from a drivers’ group and a labor union, ending their quest to bring full employee benefits to the state’s gig workers.

The California Supreme Court ruling affirms the state’s definition of drivers and other gig workers as independent contractors. Proposition 22, which received the support of 59 percent of voters in 2020, gives gig workers limited benefits like a baseline income and health insurance for those working at least 15 hours a week. However, it also allows the companies to avoid providing the broad swath of benefits full employees receive.

The Service Employees International Union and a drivers’ group sued to challenge the law after it went into effect in early 2021. Their lawsuit got an early boost from lower courts: An Alameda County Superior Court Justice ruled that year that Proposition 22 was “unconstitutional and unenforceable,” as the LA Times reported. The lower-court judge determined that the law diminished the state Legislature’s power to regulate injury compensation for workers.

However, in 2023, a state appeals court ruled the opposite, that Proposition 22 didn’t impede on the Legislature’s authority. Thursday’s decision upholds that ruling, ending the long saga and leaving the state’s gig workers with fewer benefits than they’d otherwise have. Proposition 22 remained in effect during the legal challenges, so nothing will change in how they’re treated.

Uber, Lyft, DoorDash and other gig-economy companies fought tooth and nail to pass and uphold the law. Four years ago, they invested upwards of $200 million in campaigning for it. They even threatened to pull their businesses from the state if they were forced to classify drivers as employees.

The LA Times reports the decision could influence other states’ laws. Uber has lobbied for similar legislation in other parts of the US. A law in Washington state closely parallels it, and the companies recently settled with the Massachusetts attorney general to provide similar (minimal) benefits to gig workers in that state.

Uber framed the ruling as a victory for upholding the will of the people (well, apart from the gig workers who wanted more benefits and protections). The company described the Supreme Court’s decision as “affirming the will of the nearly 10 million Californians who voted to deliver historic benefits and protections to drivers, while protecting their independence.”