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The popular ride-sharing services Uber and Lyft that are used by millions of non-car-owners to hop a ride somewhere or earn a living driving others somewhere may eventually be headed out of California thanks to a stunning judicial ruling Friday.
During the 2020 presidential election, California residents voted for Proposition 22, a law that protects ride-sharing services from another law, AB-5, that essentially outlawed contract work.
Approved by Gov. Gavin Newsom in 2019, AB-5 made it so that companies in California may not hire freelancers; everyone who works for a company must be an actual employee with all the associated benefits.
The law led to mass terminations in multiple industries, because there were numerous companies that couldn’t afford to make all their freelancers into actual employees:
#AB5stories, Danielle: “I just lost my main source of income because they didn’t want to make me an employee to follow #AB5. My other side jobs I use to sustain myself are freelance gigs that are on my own accord and I enjoy. This law will cause me to lose my home.”
— Kevin Kiley (@KevinKileyCA) July 15, 2020
#AB5stories, Marsha: “I lost my job of 12 years as a medical transcriptionist because of #AB5. Many in this profession value the flexibility in hours and working from home more than employee status. Now I have no money at all.”
— Kevin Kiley (@KevinKileyCA) July 10, 2020
— Senator Shannon Grove (@ShannonGroveCA) March 2, 2020
Uber and Lyft drivers would have suffered the same fate, except that the two companies filed lawsuits. Meanwhile, as their cases made their way through the courts, Proposition 22 was proposed to undo some of AB-5’s effects. One of the stipulations in Proposition 22 granted a waiver to Uber and Lyft.
A year later, a majority of the state’s voters chose in the 2020 election to back Proposition 22.
Their vote reportedly saved millions of California residents their ride to work or their job.
“The companies will save billions of dollars a year in operating costs, helping to ensure their survival and the availability of this type of gig work for the hundreds of thousands of Americans who make their living or supplement their income by delivering passengers, food and other goods to their desired destinations,” Newsweek reported at the time.
Yet unions, who purport to care about workers, immediately filed suit after the election, and on Friday they scored their first victory thanks to Alameda County Superior Court Judge Frank Roesch.
According to The Washington Post, Roesch took issue with a separate stipulation within Proposition 22 barring freelance workers from engaging in collective bargaining, a union activity typically reserved for those who are actual employees.
“A prohibition on legislation authorizing collective bargaining by app-based drivers does not promote the right to work as an independent contractor, nor does it protect work flexibility, nor does it provide minimum workplace safety and pay standards for those workers,” Roesch ruled.
“It appears only to protect the economic interest of the network companies in having a divided, ununionized workforce, which is not a stated goal of the legislation,” he added.
Unions immediately celebrated the ruling.
Bob Schoonover, President of SEIU California State Council, issued the following statement:
“Today’s ruling by Judge Roesch striking down Proposition 22 couldn’t be clearer: The gig industry-funded ballot initiative was unconstitutional and is therefore unenforceable… https://t.co/0Dj2YEqt8N
— SEIU 1021 (@seiu1021) August 21, 2021
“Today’s ruling by Judge Roesch striking down Proposition 22 couldn’t be clearer: The gig industry-funded ballot initiative was unconstitutional and is therefore unenforceable,” SEIU California State Council labor union president Bob Schoonover said in a statement.
“Companies like Uber and Lyft spent $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,” he added.
Though Schoonover accused Uber and Lyft of undermining democracy, it should be noted that it was unions that decided to ignore the will of California voters and sue to overturn a law that they support.
“This ruling ignores the will of the overwhelming majority of California voters and defies both logic and the law,” Uber spokesperson Noah Edwardsen reportedly said in a statement.
For the time being, the state’s ride-sharing users and contractors are in luck.
“The companies don’t need to immediately change their way of doing business,” according to The Wall Street Journal.
The case will need to wind its way through courts. Stanford University law professor emeritus William Gould believes it’ll eventually make it to California’s highest court.
“I think this is quite obviously important and precedential, and the final word is going to be with the Supreme Court of California,” he told the Post.
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