California judge strikes down ‘unconstitutional’ gig worker law

A 2020 ballot that exempted ride-share drivers from a state labour law is unenforceable and unconstitutional, a California judge has ruled.

Prop 22, the controversial measure which allows companies to treat workers as independent contractors, was approved by voters last November after a US$200 million lobbying campaign by firms including Uber, Lyft and DoorDash.

In delivering his ruling, Alameda County Superior Court Judge Frank Roesch stated that Prop 22 “limits the power of a future legislature to define app-based drivers as workers subject to workers’ compensation law,” adding the measure was “unenforceable” and “unconstitutional”.

While Prop 22 will remain in effect for the time being, the ruling will serve as a serious blow for firms like Uber and Lyft who have recently sought to expand similar legislation to other US states, including New York.

“Outrageous decision”

Responding to the verdict, Geoff Vetter, spokesperson for the Protect App-Based Drivers & Services Coalition (which includes Uber, Lyft, DoorDash, and Instacart), said: “We believe the judge made a serious error by ignoring a century’s worth of case law requiring the courts to guard the voters’ right of initiative.

“This outrageous decision is an affront to the overwhelming majority of California voters who passed Prop 22.”

Vetter added that the group intends to file an immediate appeal, and is confident the appellate court will uphold Prop 22.

He also pointed out that the ruling is not binding, and all the current provisions of Prop 22 will remain in effect until the appeal process is complete.

Lawsuit

In January, the Service Employees International Union (SEIU) and a group of Uber and Lyft drivers filed a lawsuit seeking to have the measure overturned, alleging that Prop 22 violates the state’s constitution and makes it harder for the legislature to create and enforce a compensation system for gig workers.

In February, California’s Supreme Court declined to hear the case, suggesting that the plaintiffs refile it in a lower court, which led to the case being heard at the Alameda County Superior Court.

Reacting to Judge Roesch’s ruling, Bob Schoonover, President of SEIU, said: “The gig industry-funded ballot initiative was unconstitutional and is therefore unenforceable.

“Companies like Uber and Lyft spent US$225 million in an effort to take away rights from workers in a way that violates California’s Constitution, they tried to boost their profits by undermining democracy and the state constitution.

“For two years, drivers have been saying that democracy cannot be bought. And today’s decision shows they were right.”

Prop 22

Prop 22 passed last November with 58 percent of the vote and was seen as a huge victory for startups that rely on so-called ‘gig workers’.

The firms claimed that AB5, a law passed in 2019 that changed the way companies classify employees, would dramatically alter their business model, and even threatened to pull out of California after a court ordered them to comply in August 2020.

Compliance with AB5 would have forced all gig economy companies to employ their drivers and, in turn, pay for healthcare, unemployment insurance and other benefits – something that could have added up to 30 percent in labour costs for firms.

Image: Automobile Italia