In 2020, California voters approved “Prop 22” through a ballot initiative, with 58% voting in favor of the measure. Prop 22 allows for so-called “gig workers” – such as Uber and Lyft drivers – to be paid as independent contractors rather than employees. Prop 22 was subsequently challenged on grounds that it conflicted with California law vesting the Legislature with exclusive authority to establish workers’ compensation regulations. Advocates for Prop 22 argued that California’s voter initiative process has power equal to the Legislature, including the ability to modify workers’ compensation statutes. On July 25, 2024, the California Supreme Court unanimously upheld the legality of Prop 22.
Yesterday’s ruling marks an important victory for ride-sharing companies and other businesses that rely on gig workers. This appears to conclude a long-standing battle between gig worker advocates including labor unions and gig economy companies and those with aligned interests. The decision confirms that California’s estimated 1.4 million gig workers are not employees who would otherwise be entitled to employee benefits such as sick leave, overtime, and workers’ compensation insurance coverage.
Under Prop. 22, gig workers are promised certain benefits, including guaranteed minimum earnings, health care stipends, and accident insurance, though many of these come with stipulations and limitations. Critics have long argued that these benefits fall short of full employee protections and that wages remain low for many gig workers.
The ruling has broad implications for the gig economy in California, and potentially beyond, with both critics and advocates suggesting, for different reasons, that the Supreme Court’s decision could lead to similar classifications in other industries. While the Court has upheld Prop 22, the decision includes language explaining the Court did not broadly decide anything more about the extent of initiative power, reserving judgment on potential future challenges to other propositions.
Nathanel Ghinghis is an associate attorney with the law firm of Dunn DeSantis Walt & Kendrick. Nathanel focuses his practice on civil litigation, with an emphasis on labor and employment, commercial and business disputes, and product regulatory compliance.
Dunn DeSantis Walt & Kendrick provides a broad spectrum of legal services to businesses of all sizes, from small, local start-ups and non-profits to large, national companies. DDWK’s real estate development and construction practice includes representing all segments of the development and construction industries on both private and public projects.
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