California Supreme Court upholds Prop 22 gig worker classification

The California Supreme CourtSupreme CourtThe highest federal court in the United States, serving as the final authority on constitutional interpretation.Key ConceptSupreme CourtThe highest federal court in the United States, serving as the final authority on constitutional interpretation.Open conceptBookmark unanimously upheld Proposition 22 on Jul. 25, 2024 in Castellanos v. State of California. The ruling allows app-based gig companies like Uber, Lyft, and DoorDash to legally classify their drivers as independent contractors instead of employees.

Proposition 22 passed in November 2020 with 58% voter support. Gig companies spent over $200 million on the campaign, making it the most expensive ballot measure in California history at the time. Labor unions and worker advocates raised only about $20 million to oppose it.

Justice Goodwin Liu wrote the opinion, ruling that California's Constitution doesn't bar voters from passing initiatives on matters affecting workers' compensation. The court held that the term 'unlimited' legislative power over workers' compensation is 'ambiguous' and doesn't give the legislature sole authority.

The SEIU and four drivers (Hector Castellanos, Saori Okawa, and Michael Robinson) challenged Prop 22 arguing it unconstitutionally stripped workers of labor protections. An Alameda Superior Court judge initially struck down Prop 22 in August 2021, but appeals courts reversed that ruling.

Prop 22 promises gig workers 120% of minimum wage for 'active' time only. Time spent waiting for rides or deliveries doesn't count toward minimum wage calculations, often the majority of logged-in hours. This dramatically reduces actual hourly pay.

California hasn't effectively enforced Prop 22's wage and benefit promises. Workers have no effective recourse when companies shortchange them. Studies found many gig workers earn between $6 and $12 per hour after expenses, well below California's $16 minimum wage.

More than 1.4 million Californians work as app-based gig workers for companies like Uber, Lyft, DoorDash, and Instacart. The ruling affects access to overtime, paid sick leave, unemployment insurance, and workers' compensation.

The court's ruling left open whether the legislature could pass new laws providing benefits to gig workers. Such laws wouldn't violate Prop 22 as long as they aren't considered amendments to it. Prop 22 requires a seven-eighths legislative supermajority to amend.