By: Sean King
In late August, in Castellanos v. Hagen, the California Superior Court issued a landmark decision for drivers using Uber, Lyft, and other rideshare apps.[1] It held that Proposition 22, an initiative regarding labor policies for app-based drivers, violated the state’s constitution.[2]
California approved Proposition 22 in 2020.[3] It was supported by various app-based platform companies, including Uber, Lyft, and Doordash.[4] The initiative carved out a third classification of workers for app-based drivers.[5] It labeled the drivers as “independent contractors” and provided certain benefits to these drivers while simultaneously preventing them from being labeled as employees.[6] The court made three key findings leading it to conclude the initiative violated the California Constitution.
First, the court found that Proposition 22 was in violation of the state’s workers’ compensation law.[7] The court explained, section 7451 of Proposition 22 violated the state legislature’s authority under the California Constitution to set and control workers’ compensation.[8] In order to qualify for workers’ compensation, you must be labeled an employee.[9] The initiative limits this plenary power through section 7451 by labeling app-based drivers as independent contractors.[10] The court found this limitation unconstitutional.[11] Because section 7451 is not severable, the entirety of the initiative is unenforceable.[12]
Second, the court found issue with the amendment provision of the initiative.[13] Section 7465 subdivision (c)(4) of Proposition 22 stated that “any statute that authorizes any entity or organization to represent the interests of app-based drivers in connection with drivers’ contractual relationships with network companies, or drivers’ compensation, benefits, or working conditions, constitutes an amendment of this chapter . . . .”[14] The proponents of the initiative feared that the legislature could take subsequent action that would give these app-based drivers rights akin to that of workers labeled as employees.[15] The court pointed out that even the most “maximal state law” would not make these independent contractors employees.[16] Therefore, the court rejected subdivision (c)(4) because it “unconstitutionally purports to limit the legislatures ability to pass future legislation that does not constitute an ‘amendment.’”[17]
Third, the court found that the initiative violated the “single subject” requirement for California initiatives.[18] Specifically, the California Constitution requires “initiative statutes [to] be limited to a single ‘subject.’” [19] The test for this is “whether the parts of the statute are ‘reasonably germane to a common theme, purpose, or subject.’”[20] The purpose of Proposition 22 was to “protect[] the opportunity for Californians to drive their cars on an independent contract basis, to provide those drivers with certain minimum welfare standards, and to set minimum consumer protection and safety standards to protect the public.”[21] Collective bargaining is related to the economic interests of the companies, but not to the purpose of the initiative.[22] Because Proposition 22’s prohibition on collective bargaining is not germane to the initiatives “common purpose,” the initiative is unconstitutional.[23]
Castellanos, the plaintiff of this case and a full-time rideshare driver, is seeing this as a big win for drivers hoping to obtain the same rights as individuals labeled as employees. With this victory, app-share drivers can receive workers compensation, health insurance, and other benefits through their ride-share companies.[24] However, the fight is seemingly far from over. Geoff Vetter, a spokesperson for the group “Protect App-Based Drivers and Services Coalition”—which is sponsored by Uber, Lyft, and other rideshare apps—stated that “[w]e will file an immediate appeal and are confident the Appellate Court will uphold Prop 22.” [25] With other states across the country looking to implement laws similar to Proposition 22, the nation will look to California in deciding how to classify app-based drivers in future employment and labor legislation.
[1] Castellanos v. Hagen, No. RG21088725, 2021 Cal. Super. LEXIS 7285 at *18 (Cal. Super. Ct. August 20, 2021).
[2] Id. at *18.
[3] Id. at *1
[4] Kate Conger, California’s Gig Worker Law is Unconstitutional, Judge Rules, N.Y. Times (August 23, 2021), https://www.nytimes.com/2021/08/20/technology/prop-22-california-ruling.html.
[5] Id.
[6] Id.
[7] Castellanos, 2021 Cal. Super. LEXIS 7285, at *6.
[8] Id. The constitution gives the legislature the “plenary power, unlimited by any provision of this Constitution, to create, and enforce a complete system of workers’ compensation.” Id. at *1(quoting Cal. Const. art. XIV, §4).
[9] Id. at *2.
[10] Id.
[11] Id. at *5 –*6. The court pointed out the conflict between Article XIV, Section 4 and Article II, Section 10 and stated that, if the people wish to limit the power that Article XIV, section 4 gives the legislature, they must first do so by initiative constitutional amendment and not by initiative statute.
[12] Id. (“When the People adopted Proposition 22, they expressed their intention that its provisions be severable, except that, if Section 7451 is held to be unconstitutional, the whole Act should be stricken.”).
[13] Id. at *15.
[14] Cal Bus. & Prof. Code § 7465.
[15] Castellanos, 2021 Cal. Super. LEXIS 7285, at *14.
[16] Id.
[17] Id. at *14–15.
[18] Castellanos, 2021 Cal. Super. LEXIS 7285, at *17.
[19] Id. (quotingCal. Const. art. II, §8(d)).
[20] Id. (quoting Brown v. Superior Court, 63 Cal. 4th 335, 350 (2016)).
[21] Id. at *16.
[22] Id. at *17.
[23] Id.
[24] Kate Conger, Uber and Lyft Drivers in California Will Remain Contractors, ABC News (November 4, 2020), https://www.nytimes.com/2020/11/04/technology/california-uber-lyft-prop-22.html.
[25] Catherine Thorbecke, Ruling that California’s Prop. 22 is unconstitutional prompts dueling reactions from gig workers and rideshare companies, ABC News (August 23, 2021), https://abcnews.go.com/Business/fight-rideshare-drivers-react-ruling-prop-22-unconstitutional/story?id=79599366.
