Uber, Lyft, DoorDash win as appeals court upholds California's Prop. 22
By Levi Sumagaysay
Gig companies score major victory in their battle to continue treating their drivers as independent contractors
Uber Technologies Inc., Lyft Inc. and DoorDash Inc. on Monday scored a major victory in their battle to continue treating their drivers as independent contractors as an appeals court let most of an embattled California law stand.
A divided California appeals court overruled a judge's ruling that Proposition 22, the ballot proposition on which Uber (UBER), Lyft (LYFT), DoorDash (DASH) and other gig companies spent more than $200 million and which 58% of the state's voters approved in 2020, was unconstitutional.
The First District Court of Appeal in San Francisco said in a decision released Monday afternoon that Prop. 22 does not "intrude on the Legislature's workers'compensation authority or violate the single-subject rule," which a lower-court judge had cited in his 2021 ruling throwing out the voter-approved law. But the appeals court did agree with the plaintiffs -- four ride-hailing drivers and the Service Employees International Union -- that Prop. 22 limits lawmakers' ability to enact legislation to amend it, so the court ruled to sever that section of the law while leaving the rest of it intact.
The companies, which have fought for years to preserve their business models that rely on not classifying app-based drivers and couriers as employees and put forth Prop. 22 as a way to solidify that in California, were pleased with the outcome.
"This landmark law has now been affirmed at the ballot box and in the courtroom, and the special interests working to overturn the will of 10 million California voters should rest their case," said Elizabeth Jarvis-Shean, a spokesperson for DoorDash.
"We're pleased that the court respected the will of the people, and that Prop. 22 will remain in place, preserving independence for drivers," said Tony West, chief legal officer for Uber, in a statement.
"We are pleased that the court upheld the democratic will of the voters and the fundamentals of Prop. 22," said Shadawn Reddick-Smith, a spokesperson for Lyft.
The plaintiffs acknowledged the setback but are encouraged by the court severing the section that would have limited lawmakers' ability to introduce legislation to amend Prop. 22. They said it could lead the way for lawmakers to introduce legislation that would allow for gig workers to collectively bargain -- which has been introduced in other states like Massachusetts, for example.
See: Uber and Lyft drivers in Massachusetts are fighting for the right to unionize
Sergio Avedian, a Los Angeles-based longtime Uber driver who also writes and hosts a podcast about the gig economy, said he thinks "states going to bat for drivers" is how gig workers will gain rights. He said Prop. 22 was "presented as something to help the drivers" -- by giving them a guaranteed wage based on when they are "engaged" in a ride or delivery, plus a healthcare stipend if they qualify -- but has failed to do so.
See: Uber and Lyft drivers net less than $7 an hour after California law passed, driver-led study finds
Tia Orr, executive director of SEIU California, did not say for sure whether the plaintiffs will appeal and ask the state supreme court to review the case. Orr said the union is "considering all options... and will let drivers take the lead."
"The companies might come out and cheer that this is a victory for them," Orr said, but pointed to the part of the decision that she says clears the way for possible legislation that would give gig workers the right to collectively bargain. "There is something big here -- workers' voices cannot be silenced. These workers have been fighting for many years, and they're not going to stop their fight because of the decision today."
Previously: Uber and Lyft's fight with California takes on bigger question of voters' sway
One judge out of the three-judge appeals court dissented and said he would've affirmed the lower court judge's decision that Prop. 22 was unconstitutional.
In his dissent, Judge Jon Streeter wrote that Prop. 22 is "the first attempt in the history of California workers' compensation to drop a class of wage workers in one industry entirely from the workers' compensation system," over which he said the state legislature has plenary power per the state constitution.
Both sides now have 40 days to file a petition for review by the California Supreme Court.
Shares of gig companies rose in extended trading Monday, with Uber up nearly 5%, Lyft up 5% and DoorDash up about 4%.
Also: Uber, Lyft drivers say new California law isn't solving their health-care needs
-Levi Sumagaysay
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March 14, 2023 07:31 ET (11:31 GMT)
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