Delivery companies like DoorDash and Uber Eats can continue to treat their California drivers as independent contractors rather than full-fledged employees, a state court ruled.
It’s the latest decision in the tug-of-war over Proposition 22, the gig-company-backed law that voters approved in November 2020. The law shields the companies from having to reclassify their drivers as employees with full benefits and protections.
In August 2021, in response to a lawsuit from the Service Employees International Union, a county superior court judge ruled that Prop 22 was unconstitutional. Gig companies immediately appealed, and the decision was overturned Monday by California’s 1st District Court of Appeals.
The ruling is widely expected to be appealed to California's Supreme Court.
Delivery companies hailed Monday's decision as a victory for drivers because it preserves their ability to work whenever and wherever they want.
“App-based work offers millions of Californians the independence to earn on their own terms,” said Kristin Sharp, CEO of Flex, a group representing gig companies, in a statement. “We are pleased the court today upheld their flexibility and freedom.”
Under Prop 22, drivers are considered independent contractors with some additional benefits, such as accident insurance and the ability to get a healthcare stipend. But the companies are still excused from offering certain protections afforded to full-time employees, like paid sick leave and workers’ compensation.
The county superior court judge ruled that the law was unconstitutional because it limited the legislature’s ability to make workers’ comp laws and because it violated a rule that says ballot initiatives can address only one topic. The appeals court struck down both arguments.
Gig companies including DoorDash and Uber Eats lobbied to get the measure on the ballot in 2020 and then contributed more than $50 million each to the cause, helping to make it the most expensive ballot initiative in California history.
Their approach has been copied by California’s restaurant industry, which collected enough signatures to bring the state’s controversial Fast Act before voters in 2024. The landmark union-backed measure would give employees of fast-food chains a say in their wages.
The court’s latest ruling on Prop 22 lends some validation to restaurants’ strategy of letting voters decide.
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