In a landmark decision, the Alameda Superior Court of California recently ruled that Proposition 22, the ballot initiative that excluded many app-based workers from foundational labor laws, violates the California constitution and must be struck down in its entirety.
The decision, which will undoubtedly be appealed by the app-based companies, represents a huge setback in the companies’ power grab to rewrite U.S. labor laws and exempt themselves from labor standards that apply to all other employers. It also represents an important advancement in the gig-worker-led movement for living wages, rights at work, employment benefits, and the right to exercise collective democratic power.
What Was California’s Prop 22?
California’s Prop 22 was a ballot initiative led by app-based companies such as Uber, Lyft, and DoorDash to exclude ride-hail and food-delivery app-based workers from nearly all employee rights under state law, including the right to a minimum wage, time-and-a-half for overtime, expenses reimbursement, and benefits such as unemployment compensation and state workers’ compensation.
The companies developed the ballot initiative in response to the California legislature’s passage in 2019 of AB5, a simple and straightforward test for determining who is an employee and who is an independent contractor. Although Uber and Lyft ride-hail drivers and DoorDash, Instacart, and Postmates food-delivery workers are clearly employees under the AB5 test, these companies steadfastly refused to comply with the law and continued to deny their workers the rights and benefits to which they are entitled as employees.
As state and local officials sued Lyft, Uber, DoorDash, and Instacart to get them to stop violating the law, the companies spent a whopping $224 million on Prop 22. Among the provisions included in Prop 22 were an inferior set of benefits that the companies agreed to provide their app-based workers. And, worst of all, Prop 22 could only be amended by a seven-eighths vote of the state legislature, making its provisions virtually impossible to repeal or change.
To get Prop 22 passed, Uber and Lyft bombarded television, social media, and their own workers with pressure tactics and deceptive advertising, including the flat-out false claim that Prop 22 would increase, not decrease, workers’ rights. As a result, one survey of California voters founds that 40 percent of “yes” voters thought they were supporting gig workers’ ability to earn a living wage. [1] Other voters said they did not realize they were making a choice between guaranteed rights and protections through employment and “an arbitrary set of supplemental benefits . . . designed by the gig companies.” [2]
Uber also adopted a new cynical marketing slogan—“If you tolerate racism, delete Uber”—to claim solidarity with the Black Lives Matter movement while, at the same time, seeking to enshrine a second-class employment status for California’s ride-hail and food-delivery app-based workers, who are overwhelmingly people of color and immigrants, in what legal scholar Veena Dubal has called a “new racial wage code.”[3] Dubal writes: “By highlighting particular forms of racial subjugation, while ignoring and profiting from others, the corporate sponsors of Prop 22 successfully concealed the very structures of racial oppression that [Prop 22] entrenched and from which companies benefit.”[4]
What Happened After Prop 22 Passed?
After Prop 22 passed, and app-based workers were stripped of their employee rights, the benefits package that the companies offered in exchange proved to be a mirage. In order to qualify for a promised healthcare stipend, for example, app-based workers need to a purchase a covered policy in advance and get enough work hours to qualify for the stipend; if they don’t, they must pay the full cost of the premium.[5] One survey of app-based workers found that only 15 percent have applied for the healthcare stipend.[6]
And, despite the companies’ claims of guaranteed earnings, pay decreased for many ride-hail and food-delivery drivers after Prop 22 passed. According to Peter Young, an app-based ride-hail and food-delivery driver for years, incentives offered to drivers disappeared after Prop 22 passed, and he experienced cuts to his base pay and unpredictable fluctuations in income.[7] Ben Valdez, an Uber driver, similarly said that pay continues to vary widely, and that he averages about $150 per day before expenses for 12 to 15 hours of work—well below California’s $14 minimum wage.[8] In fact, a study by labor economists found that Prop 22 guarantees a minimum wage of only $5.64 per hour after expenses and waiting time are taken into account.[9]
Even the companies’ central claim—that excluding their workers from employee rights and benefits is necessary to keep their prices affordable—proved to be false. A month after Prop 22 passed, both DoorDash and Uber Eats announced price hikes, a move the workers’ advocacy group Gig Workers Rising decried as a “corporate bait and switch.”[10]
The aftermath of Prop 22 made clear that its sole objective was to insulate app-based companies’ business model from any legal or worker challenge, so the companies could once and for all pass costs onto workers and consumers in a last-ditch attempt at profitability.
Why Did the Court Ruling Find Prop 22 Unconstitutional?
In his ruling that Prop 22 is unconstitutional and unenforceable, California Superior Court Judge Frank Roesch found that the ballot initiative infringes on the power explicitly granted to the California Legislature to regulate workers’ compensation.[11] Prop 22 also included language that prevents the state legislature from passing laws that allow app-based workers to unionize, which the court ruled violated a constitutional provision requiring that ballot initiatives be limited to a single subject.[12] The court also took issue with the substance of this provision, noting that preventing app-based workers from organizing “does not not protect work flexibility, nor does it provide minimum workplace safety and pay standards for those workers. It appears only to protect the economic interests of the network companies in having a divided, ununionized workforce.” [13]
What’s Next Now That Prop 22 Is Unconstitutional?
The app-based companies will appeal the court’s decision, and they will ask for a stay of the ruling while the appeal is pending. If granted, it means that Prop 22 would remain in effect—and app-based drivers and food-delivery workers would continue to be excluded from most state labor rights and benefits—through the appeals process, which could take a year or longer.[14]
What Other States Face Legislation Like California’s Prop 22?
Regardless of the final outcome in the Prop 22 case, app-based companies will continue to spend millions to fund legislation and ballot initiatives that would make it easier for them to avoid accountability as an employer and to depress wages and working conditions for their app-based workers. Their CEOs have made clear that Prop 22 is their model legislation across the country.[15]
In Massachusetts, for example, Uber, Lyft, and DoorDash are funding another ballot initiative to rewrite labor laws to benefit themselves and enshrine independent contractor status for their app-based workers.[16] The push for a ballot initiative comes after Massachusetts Attorney General Maura Healey sued Uber and Lyft for misclassifying their drivers as independent contractors. It appears that the companies, having determined that their likelihood of winning in court is low, have decided it will be easier to simply rewrite the law.
Prop 22–like legislation does not just hurt workers who currently obtain work through apps and other online platforms. At risk is virtually any worker whose job functions can be “gigged out” piecemeal on an app.
Luckily, the aftermath of Prop 22 mobilized app-based workers more than ever, and they are fighting back. In Massachusetts, workers’ rights groups and community organizations launched the Coalition to Protect Workers’ Rights, which aims to “combat Big Tech companies’ campaign to undermine the rights and benefits of their workers.”[17] In New York, a coalition of workers’ rights organizations defeated a state bill pushed by app-based companies that would have created a top-down collective bargaining structure for ride-hail and food-delivery app-based workers while excluding them from nearly all state and local labor rights and protections.[18]
This progressive change is due to the persistence and commitment of workers and their advocates. App-based workers are emboldened in the fight for equal rights, and they are just getting started.
ENDNOTES
[1] Faiz Siddiqui & Nitasha Tiku, Uber and Lyft Uses Sneaky Tactics to Avoid Making Drivers Employees in California, Voters Say. Now They’re Going National, Washington Post, Nov. 17, 2020. [2] Id. [3] Veena Dubal, The New Racial Wage Code, Hastings Law & Policy Review, at 3-4, Aug. 17, 2021, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3855094. According to one study of the San Francisco Bay Area in 2019, immigrants and people of color comprised 78 percent of Uber and Lyft drivers, most of whom relied on these jobs as their primary source of income. Chris Benner, Erin Johansson, Kung Feng & Hays Witt, On-Demand and On-the-Edge: Ride-hailing and Delivery Workers in San Francisco, University of Santa Cruz Institute for Social Transformation, May 5, 2020, at 2 https://transform.ucsc.edu/wp-content/uploads/2020/05/OnDemandOntheEdge_ExecSum.pdf. [4] Id. at 20. [5] Megan Rose Dickey, California Gig Workers Say Prop. 22 Isn’t Delivering Promised Benefits, Protocol, May 25, 2021, https://www.protocol.com/policy/gig-workers-prop-22-benefits. [6] Tulchin Research, April 20, 2020 [7] Michael Sainato, ‘I Can’t Keep Doing This’: Gig Workers Say Pay Has Fallen After California’s Prop 22, Guardian, Feb. 18, 2021, [8] Id. [9] Ken Jacobs & Michael Reich, The Uber/Lyft Ballot Initiative Guarantees Only $5.64 an Hour, UC Berkeley Labor Center, Oct. 31, 2019, https://laborcenter.berkeley.edu/the-uber-lyft-ballot-initiative-guarantees-only-5-64-an-hour-2/. [10] Eve Batey, That Price Hike That Delivery Apps Threatened If Prop 22 Failed? It’s Happening Anyway, Dec. 15, 2020, https://sf.eater.com/2020/12/15/22176413/uber-eats-doordash-price-hike-fee-december-prop-22 [11] Castellanos v. California, Case No. RG21088725, at 2-4 (Alameda Co. Sup. Ct. Aug. 20, 2021). [12] Id. at 10-11. [13] Id. at [14] Suhauna Hussain, Prop 22. Was Struck Down; Will the Ruling Stick? Uber and Other Gig Companies Plan to Appeal; It Could Drag on for More Than a Year, L.A. Times, Aug. 26, 2021. [15] Faiz Siddiqui, Uber Says It Wants to Bring Laws Like Prop 22 to Other States, Washington Post, Nov. 5, 2020, https://www.washingtonpost.com/technology/2020/11/05/uber-prop22/. [16] Nate Raymond & Tina Bellon, Groups Backed by Uber, Lyft Pushes Massachusetts Gig Worker Ballot Initiative, Reuters, Aug. 4, 2021. [17] Grace Pham, The Launch of a New Coalition: Protecting the Rights of Gig Workers in Massachusetts, Massachusetts Jobs with Justice, June 29, 2021, https://www.massjwj.net/blog/2021/6/29/the-launch-of-a-new-coalition-protecting-the-rights-of-gig-workers-in-massachusetts [18] Edward Ongweso Jr., A Plan to Tame Labor Unions for Uber and Lyft Has Been Scrapped in New York, Vice, June 9, 2021.About the Author: Brian Chen is a staff attorney at the National Employment Law Project. Brian focuses on combating exploitative work structures that subordinate workers in low-wage industries. Brian is admitted to practice law in New York and is a proud member of the NELP Staff Association, NOLSW, UAW, Local 2320.
About the Author: Laura Padin joined NELP in 2018 as a senior staff attorney for the Work Structures Portfolio. Laura’s work focuses on policies that improve workplace standards and economic security for the contingent workforce, including temporary workers and workers in the “gig economy.” Laura is a proud member of the NELP Staff Association, National Organization of Legal Services Workers, UAW Local 2320.
This blog originally appeared at NELP on September 16, 2021. Reprinted with permission.
