- A California judge ruled that Proposition 22, passed by voters in November, is unconstitutional.
- Prop 22 exempted food delivery and ride-hailing workers from state labor law protections.
- An industry-backed PAC supporting Prop 22 said it will appeal the ruling.
- See more stories on Insider's business page.
In a huge setback for Uber, Lyft, and DoorDash, Alameda County Superior Court Judge Frank Roesch ruled Friday that Proposition 22, a measure that allowed gig companies to classify their app-based drivers as independent contractors rather than employees, is unconstitutional.
In a lawsuit filed by the Service Employees International Union, Roesch ruled that Prop 22 is "unenforceable" because several sections are unconstitutional under California law. That included a requirement that a seven-eighths majority of the legislature approve amendments, creating a "near impossibility" that any changes could be made.
Roesch also found that Prop 22's ban on workers' ability to collectively bargain violated California's requirement that ballot measures be limited to a single subject with provisions related to that subject.
"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 wrote, adding: "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."
Geoff Vetter, spokesperson for the Protect App-Based Drivers & Services Coalition (PADS), a political action committee (PAC) organized by gig companies to support the ballot initiative, said an appeal would be filed immediately to stay the decision.
Uber and DoorDash, in separate statements sent to Insider, both pushed back on the ruling. Lyft and Instacart did not immediately respond to requests for comment.
"This ruling ignores the will of the overwhelming majority of California voters and defies both logic and the law. You don't have to take our word for it: California's Attorney General strongly defended Prop 22's constitutionality in this very case," Uber said in their statement, adding: "We will appeal and we expect to win. Meanwhile, Prop 22 remains in effect, including all of the protections and benefits it provides independent workers across the state."
The ballot measure, which was on California ballots during the November 2020 election, was approved by 59% of voters. Written and funded by gig companies, Prop 22 exempted ride-hailing and food delivery companies from complying with state labor laws that would have required them to reclassify their workers as employees and provide them with benefits like a minimum wage, worker's compensation, and health care.
Instead, the gig companies would provide them with limited benefits, such as minimum earnings, healthcare subsidies, and vehicle insurance under Prop 22.
"Prop 22 is not just harmful for gig workers - it is also dangerous for our democracy. This fight is not over until all gig workers receive the living wages, benefits, and voice on the job they have earned," said Shona Clarkson, a lead organizer for Gig Workers Rising, a community of app- and platform-based workers organizing for better wages, working conditions, and jobs.
Gig companies have already started to push copycat bills in other states.