California Judge Strikes Down Prop 22; Uber, Lyft To Appeal

(The Center Square) – As part of an ongoing battle in California over Assembly Bill 5 (AB5), a law that nearly eliminated independent contract work in the state and continues to be litigated in the courts, a Superior Court judge ruled that two sections of a ballot measure approved by voters in response to AB5 were unconstitutional.

Proposition 22 was approved Nov. 3, receiving more than 58% of the vote. It overrode portions of AB 5, signed into law by Gov. Gavin Newsom in September 2019.

The ballot initiative defined app-based transportation, rideshare and delivery drivers as independent contractors and not employees or agents, exempting them from the new law created to mandate that most workers in California be classified as employees eligible for employer-paid benefits.

Business travelers request an Uber ride at Los Angeles International Airport’s LAX-it pick up terminal Thursday, Aug. 20, 2020. An appeals court has allowed ride-hailing giants Uber and Lyft to continue treating their drivers as independent contractors in California while an appeal works its way through the court. Both companies had threatened to shut down if a ruling went into effect that would have forced them to treat all their drivers as employees.

The Service Employees International Union, along with four individuals, sued in January, arguing Proposition 22 was unconstitutional and unenforceable. They argue it violates Section 4 of Article XIV of the California Constitution, which “grants to the Legislature ‘plenary power, unlimited by any provision of this Constitution’ to establish and enforce a complete system of workers’ compensation.”

On Aug. 20, Alameda County Superior Court Judge Frank Roesch agreed, ruling that two sections of Proposition 22 were unconstitutional and that the law resulting from the proposition was unenforceable.

“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. “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.”

Uber plans to appeal.

In response to the ruling, Uber spokesman Noah Edwardsen said, “This ruling ignores the will of the overwhelming majority of California voters and defies both logic and the law. 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.”

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

Uber and Lyft challenged AB5 in court last year, saying if they weren’t exempted from it, they would be forced to leave the state. Lyft’s plan to leave by midnight on Aug. 20, 2020, was halted by an emergency stay issued by an appeals court. Instead of being forced to reclassify their business or go out of business by a certain date, the companies were granted a reprieve until at least mid-October. Then voters approved Proposition 22 on Nov. 3.

After AB5 became law, thousands of independent contractors were put out of work, beginning an exodus from California, which for the first time in the state’s history in 2020 reported a population loss.

“AB 5 is a nightmare law that made it illegal for hundreds of thousands of freelancers to earn a living,” Tom Manzo, president and founder of the California Business and Industrial Alliance, said after the ballot measure passed. “Luckily, the people of California delivered a verdict against it and in favor of the gig economy – speaking louder than the paid politicians and union interests that stuck us with AB 5 in the first place. Passing Prop 22 is the first step toward reversing the havoc this misguided law has wreaked in our state, and ensuring innovation and entrepreneurship have a chance at survival in California.”

The California Truckers Association also recently petitioned the U.S. Supreme Court to invalidate the law, arguing it is detrimental to the livelihoods of 70,000 independent owner operators.


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