The unending battle over a California ballot measure classifying app-based drivers as independent contractors has the potential to impact a slew of pending misclassification cases and efforts to replicate the law elsewhere, even as a ruling that struck it down is tied up in appeals for the foreseeable future.
A state judge held last week that Proposition 22 is unconstitutional, in a decision that some management attorneys and proponents of the measure described as “unprecedented” and at odds with the democratic process.
And while the gig economy status quo won’t change immediately in California, Prop. 22 challengers and workers’ rights advocates say the ruling’s ultimate outcome will eventually be raised in arguments for ongoing litigation seeking minimum wages, overtime, and other employee rights for drivers.
It also will be felt around the country, they said, as gig companies push similar measures in state legislatures and at the ballot box. Massachusetts, for example, is likely the next battleground for another high-stakes ballot initiative to classify gig drivers as contractors who don’t have the full job benefits guaranteed to employees.
“The ruling exposes serious risks legally, and big problems politically,” said Mike Firestone, director of the Coalition to Protect Workers’ Rights, which opposed the passage of Prop. 22. “Good luck explaining to voters outside California why they should pass a copycat law when Prop. 22 has been struck down in the only place it’s been passed.”
Trial Court Ruling
California voters approved Prop. 22 last November, allowing app-based companies to classify their ride-hail and delivery drivers as independent contractors with limited benefits like health-care subsidies and minimum earnings. The measure was a carveout from Assembly Bill 5, a law that codified a three-part legal test that makes it hard for companies to classify drivers as contractors.
In February, the California Supreme Court declined to directly take up a challenge seeking an emergency order declaring Prop. 22 invalid, but said it could be brought in an “appropriate court.”
A handful of drivers and the Service Employees International Union renewed that challenge in Alameda Superior Court, where Judge
Roesch said Section 7451 of the law violated California’s Constitution by limiting the state legislature’s future ability to extend workers’ compensation law to app-based drivers.
Although Prop. 22 contains a severability clause, which would allow the court to simply remove any unconstitutional provisions and leave the law otherwise intact, it doesn’t apply to this particular provision, Roesch said.
Roesch also determined that another provision was unconstitutional because it limits the legislature’s ability to pass laws that might provide these drivers with certain employment rights, like collective bargaining, but aren’t related to the statute’s overall purpose.
“This ruling is not just wrong, but a direct attack on Dashers’ independence. It will not stand,” DoorDash said in a statement. “Prop 22 remains in full effect, and workers across California will continue to enjoy the independence and protections they want.”
Lyft directed Bloomberg Law to obtain comment from the Protect App-Based Drivers & Services Coalition, which supports Prop. 22.
Uber shared an earlier statement vowing to appeal the decision. “This ruling ignores the will of the overwhelming majority of California voters and defies both logic and the law,” said Uber spokesperson Noah Edwardsen.
Slow Resolution
Proponents and challengers agree the ruling is likely to be dispositive in a large number of pending misclassification cases, but are divided over when that impact will be felt.
“There probably won’t be much movement on any front until the Court of Appeal has a chance to pass judgment on Prop. 22,” said Kurt Oneto, a partner at Nielsen Merksamer Parrinello Gross & Leoni LLP, which represents the Protect App-Based Drivers & Services Coalition, a group supporting Prop. 22.
California courts are currently weighing whether Prop. 22 should abate claims that were filed against gig companies before the measure went into effect. Millions in potential damages are at stake in those cases.
Shannon Liss-Riordan, a plaintiff’s attorney with Massachusetts-based Lichten & Liss-Riordan P.C., said she doesn’t anticipate that Roesch’s ruling will have an immediate impact on pending gig cases she’s involved in, partly because they’re arguing Prop 22. doesn’t bar those claims.
“It’s just an additional argument that will be addressed later down the line, and by the time it does, we may have appellate authority on Friday’s ruling,” Liss-Riordan said.
She also pointed to the ongoing debate about whether companies are complying with the ballot measure’s driver benefits requirements.
“Judges have recognized that companies only get the benefit of the Prop. 22 defense if they’re also providing the benefits promised as part of the bill,” Liss-Riordan said.
Harmeet Dhillon, a San Francisco lawyer who represents both employers and employees in discrimination and wage-and-hour cases, expects more litigation to arise out of the trial judge’s decision and expects a slow resolution in the courts.
“I fully predict a race to the courthouse for a wave of renewed litigation,” Dhillon said. But she said she questions whether the ruling will stand.
Beyond California
In Massachusetts, Uber, Lyft, Doordash, and others are heavily lobbying to place a Prop. 22-like measure on the ballot for November 2022.
The state’s attorney general—who has already sued Uber and Lyft over worker misclassification—is expected to either certify or reject the ballot initiative in September. Like Prop. 22, that measure would exempt ride-hail and delivery drivers from any state effort to require gig workers to be considered employees.
“The ruling on Friday bolsters the argument about why the provision shouldn’t appear on the Massachusetts ballot,” Liss-Riordan said.
The two states have different laws regarding what’s an appropriate question for a ballot initiative, but share the principle that an initiative should ask one unified question of voters, she said.
She also pointed to Massachusetts’ process for getting such initiatives in front of voters, with litigation over its constitutionality happening before it goes on the ballot, she said.
“California seems to do it the other way around, and these key questions are getting considered after the fact,” she said.
Proponents of the California bill argue Roesch’s ruling is narrow in scope and unlikely to impede replication efforts elsewhere, including in Massachusetts.
“The lower court ruling in California has no impact on the proposed ballot question in Massachusetts,” the Massachusetts Coalition for Independent Work, the group behind that state’s initiative, said in a statement. “The two states have different constitutions, and the provisions of Prop 22 that the lower court took issue with are not part of the Massachusetts proposal. We will continue to fight for drivers and pursue policy solutions that deliver on the independence plus benefits model they support in every state.”
Oneto, who represents Prop. 22 proponents in California, agreed. “I’m doubtful that it would translate into any other state, because of the California-centric provisions at play here,” he said.
—With assistance from Kathleen Dailey