The California Supreme Court on Thursday upheld Proposition 22, the voter initiative that allows Uber, Lyft and other gig economy companies to classify drivers for their ride-hailing and delivery services as independent contractors rather than as employees.
In a unanimous decision released Thursday morning, the state’s top court rejected claims brought by a group of drivers and unions that the law is unconstitutional because it interferes with lawmakers’ authority over matters dealing with worker compensation.
The ruling, which was expected following a lopsided hearing in the case in May, marks the end of a years-long legal fight over Proposition 22, which essentially carved out a new classification for workers who are entitled to limited benefits but not the array of rights granted full-fledged employees.
Because the law has remained in effect throughout the legal process, the decision will not change how delivery and ride-hailing services operate in California. Uber, Lyft, DoorDash and other gig companies had argued their business models depended on the law being upheld and threatened to shut down in California if it was struck down.
The decision has sweeping implications for the million-plus people who drive for various app-based companies in California. Some of these workers have raised concerns over low wages, minimal workplace protections and exploitative practices they say they face. The decision also is likely to have ripple effects on drivers across the U.S., as Uber has pushed for laws similar to Proposition 22 in other states .
The decision Thursday falls in line with comments made by justices in May when they heard oral arguments on the constitutionality of the law. Their line of questioning suggested they were not persuaded by the argument that Proposition 22 should be overturned because it interferes with the state Legislature’s authority to provide workers’ compensation protections to drivers.
Uber, Lyft, DoorDash and other companies poured upward of $200 million into a campaign to sway voters in favor of Proposition 22 in 2020. It passed with 59% of the vote and went into effect soon after.
Under the law, drivers are considered to be their own employers, a designation that frees the companies they drive for from having to provide the full slate benefits that traditional employees in the state are entitled to, such as overtime, sick leave and a minimum wage.
The Service Employees International Union and a group of drivers first brought the lawsuit challenging Proposition 22 in January 2021, just after the law went into effect. They unsuccessfully sought to take the case directly to the California Supreme Court and were left to pursue the case in a lower court.
Then, in a sweeping decision in August 2021, Alameda County Superior Court Judge Frank Roesch ruled that Proposition 22 was unconstitutional and unenforceable. The law failed to pass constitutional muster, Roesch wrote, because it infringed on the power of the Legislature, explicitly granted by the state Constitution, to regulate compensation for workers’ injuries. “If the people wish to use their initiative power to restrict or qualify a ‘plenary’ and ‘unlimited’ power granted to the Legislature, they must first do so by initiative constitutional amendment, not by initiative statute,” the judge wrote. In March 2023, a split three-judge panel from a state appeals court largely reversed that ruling, finding the law did not impede the Legislature’s authority and upholding the legality of the law’s provision classifying drivers as contractors. Supporters of the law celebrated the ruling as a “historic victory for the nearly 1.4 million drivers who rely on the independence and flexibility of app-based work to earn income, and for the integrity of California’s initiative system.”