On Friday last week, a California judge ruled the controversial Proposition 22 (Prop 22) as unconstitutional. The famous 2020 ballot cost gig economy companies Uber, Lyft, Postmates (owned by Uber) and Instacart a whopping $200 million making it the nation’s costliest ballot campaign in history. This price made clear the importance of the ballot for these companies.
The recent ruling made by Alameda County Superior Court Judge Frank Roesch will however be a major blow to these companies and inevitably all gig companies in the nation. The judge found “the entirety of Proposition 22 is unenforceable” as a section within the measure would “limits the power of a future legislature to define app-based drivers as workers subject to workers’ compensation law” and “is not severable” from the rest of the measure.”
The California Judge also referenced the fact that any future amendments require a seven-eighths vote of approval to pass the legislature.
His ruling wrote:
“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,”
“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.”
Despite this ruling, most of the affected gig economy companies remained optimistic. In a statement released on Friday, the coalition representing US gig economy companies said:
“We will file an immediate appeal and are confident the Appellate Court will uphold Prop 22. Importantly, this Superior Court ruling is not binding and will be immediately stayed upon our appeal. All of the provisions of Prop 22 will remain in effect until the appeal process is complete.”
On the other hand, the Services Employees International Union (SEIU) who represented ride-hail drivers, said via their president Bob Schnoover: “Today’s ruling by Judge Roesch striking down Proposition 22 couldn’t be clearer: The gig industry-funded ballot initiative was unconstitutional and is therefore unenforceable. Companies like Uber and Lyft spent $225 million in an effort to take away rights from workers in a way that violates California’s Constitution.”
Adding a bit of sentiment he added, “They tried to boost their profits by undermining democracy and the state constitution. For two years, drivers have been saying that democracy cannot be bought. And today’s decision shows they were right.”
The ruling was a follow up on a lawsuit filed by the SEIU way back in January this year.
As mentioned earlier Prop 22 was a significant vote for both gig economy companies and drivers in the US and abroad. Companies like Uber and Lyft were keen on passing the bill to prevent drivers from being classified as employees. This would entitle to benefits such as health and unemployment insurance, paid sick leave and overtime which would be costly for these gig companies.
The ruling, however progressive as far as drivers are concerned, does not bring an end to Prop 22. Gig companies are expected to take the matter to the Supreme Court which if upholds the original proposal would render Friday’s ruling null and void.
For now, the proposition stays, drivers will continue to be classified as independent contractors with a few benefits but not as many as they would get had they been employees.