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The California Supreme Court has reportedly rejected a lawsuit that sought to overturn the ballot measure, Prop 22, that makes app-based ride-hailing and food delivery drivers independent contractors instead of employees eligible for benefits and job protections. Justices declined to hear the case brought by Uber, Lyft, and courier drivers and unions opposed to the measure.
Prop 22 passed in November 2020 with 58% support and shielded companies like Uber and Lyft from a new state labor law, AB5, that would have required app-based services to treat drivers as employees and not independent contractors. AB5 is a landmark labor law that would have required providing drivers with protections like minimum wage, overtime, health insurance, and reimbursement for expenses. Opponents of the referendum had said the companies exploited drivers and the ballot measure would deny them benefits required for many types of other workers.
It was the most expensive ballot measure in state history with the gig economy apps putting a collective $200 million behind the efforts. Unions, who joined drivers in the lawsuit, spent about $20 million to challenge the proposition.
The lawsuit claimed the measure was unconstitutional because it limits the power of the Legislature and excludes drivers from being eligible for workers’ compensation. Seeking speedy review, the lawsuit was filed directly with the Supreme Court in Jan. 2020. Mary-Beth Moylan, associate dean of McGeorge Law School in Sacramento, told KTLA the high court could simply kick the case to a lower court if it felt there was no urgency to it.
However, not all ridesharing drivers oppose Prop 22. Many drivers actually supported the measure because they wanted to maintain the flexibility to set their own schedules. “We’re thankful, but not surprised, that the California Supreme Court has rejected this meritless lawsuit,” said Jim Pyatt, a Modesto retiree who drives for Uber, in a statement from a group that supports Prop 22, quoted by KTLA. “We’re hopeful this will send a strong signal to special interests to stop trying to undermine the will of voters.”
The parties who brought the case said they were disappointed and would continue to challenge the measure, though they didn’t specify how or if they would refile the case. In a statement from Prop 22 opponents quoted by KTLA, plaintiff Hector Castellanos said: “Make no mistake: we are not deterred in our fight to win a livable wage and basic rights. We will consider every option available to protect California workers from attempts by companies like Uber and Lyft to subvert our democracy and attack our rights in order to improve their bottom lines.”
Before Prop 22’s big win, Uber and Lyft had challenged AB5, which they claimed threatened their business model, in court. The companies even threatened to leave the state if voters rejected the measure. Under the measure, drivers remain independent contractors exempt from mandates such as sick leave and workers’ comp.
In order to pass Prop 22, the companies promised to provide their workers “alternative benefits,” including a guaranteed minimum wage and subsidies for health insurance if they average 25 hours of work a week. However, it turned out the consumer footed the bill for this, given that companies like Uber, Lyft, and DoorDash raised their prices in California to pay for their promised benefits.