In a Major Setback for California’s Gig Economy Law, Prop. 22 Ruled Unconstitutional

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Ride-hailing and delivery companies throughout California suffered a setback August 20, 2021 as a state Superior Court judge struck down the 2020 ballot proposition that allowed Uber, Lyft, DoorDash, and other app-based companies to classify their workers as independent contractors.

In a lawsuit brought by the Service Employees International Union and several drivers, Alameda County Superior Court Judge Frank Roesch held Friday that Proposition 22 is unconstitutional and unenforceable.

The Decision Details

The judge held that “app-based drivers have been removed from participation in the worker’s compensation system, as presently codified, because it protects only employees, not independent contractors.”

“Proposition 22’s Section 7451 is therefore an unconstitutional continuing limitation on the Legislature’s power to exercise its plenary power to determine what workers must be covered or not covered by the worker’s compensation system.”

Judge Roesch stated that this was because the law infringes on the power of the Legislature explicitly granted by the state Constitution to regulate compensation for workers’ injuries.

“If the people wish to use their initiative power to restrict or qualify a ‘plenary’ and ‘unlimited’ power granted to the Legislature, they must first do so by initiative constitutional amendment, not by initiative statute,” the judge wrote.

Moreover, Judge Roesch rules that by including language aimed at preventing drivers from unionizing, Prop 22 also violates a constitutional provision that requires laws and initiatives to be limited to a single subject.

Proposition 22 claims to protect Californians who opt to work as independent contractors, but it also “obliquely and indirectly” prevents them from bargaining collectively, the judge wrote.

No other part of Proposition 22 deals with collective bargaining rights other than Section 7465, subdivision (4), and it does so only obliquely and indirectly, as a side effect of a contested construction of certain antitrust laws as barring independent contractors from bargaining collectively. This is related to Proposition 22° subject but it is utterly unrelated to its stated common purpose. A prohibition on legislation authorizing collective bargaining by Appellant-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. It appears only to protect the economic interests of the network companies in having a divided, ununionized workforce, which is not a stated goal of the legislation.

Ballot Initiative Can’t Be Amended After Passage

In light of the fact that a ballot initiative can’t be amended after it is passed by voters, any unconstitutional provision makes it unenforceable.

“Because Section 7451 is not severable from the remainder of the statute, the Court finds that the entirety of Proposition 22 is unenforceable,” the judge wrote.

Ride-hailing company Uber said it would appeal. “This ruling ignores the will of the overwhelming majority of California voters and defies both logic and the law,” said Uber’s spokesperson Noah Edwardsen. “We will appeal and we expect to win.”

Reaction

“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,” said Bob Schoonover, President of SEIU California State Council in a statement. “For two years, drivers have been saying that democracy cannot be bought. And today’s decision shows they were right.”

“They tried to boost their profits by undermining democracy and the state Constitution,” said Bob Schoonover, president of SEIU California State Council, in welcoming the ruling. “For two years, drivers have been saying that democracy cannot be bought. And today’s decision shows they were right.”

Californians overwhelmingly voted for Prop 22, which won with 58% of the vote in the November 2020 election.

Takeaway

This is a significant development because while it appeared this may have been a settled issue based on Prop 22, it is now evident that the outcome of an appeal will likely determine if gig workers will be classified as employees in California and subjected to labor laws regarding for example, wages, meal breaks, rest breaks, overtime, workers compensation and benefits.

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