California appeals court reverses most of ruling deeming Prop. 22 invalid

A California appeals court reversed most of a ruling invalidating Proposition 22, the state’s 2020 voter-approved gig economy law allowing giant ride-hailing and delivery companies to classify their workers as independent contractors rather than employees.

The 1st District Court of Appeal determined Proposition 22 should stand, disagreeing with a 2021 ruling finding that central provisions of the law conflicted with the state Constitution, rendering the law unenforceable, and tossing it out in its entirety.

However, the appeals court struck down some provisions of the laws that it deemed had unduly constrained the California Legislature’s authority.

The court found that the ballot measure had improperly defined what actions constitute an amendment to Proposition 22, in violation of the state Constitution’s separation of powers principles. The court severed provisions of Proposition 22 restricting the California Legislature’s ability to authorize collective bargaining over drivers’ compensation, benefits, or working conditions and create rules singling out or otherwise putting “unequal regulatory burdens� upon app-based drivers.

The group of companies that backed Proposition 22, called the Protect App-based Drivers & Services coalition, celebrated the ruling as a “historic victory for the nearly 1.4 million drivers who rely on the independence and flexibility of app-based work to earn income, and for the integrity of California’s initiative system.�

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“The Appeals Court upheld the fundamental policy behind the measure,� Molly Weedn, a spokesperson for the coalition, said in an email.

The lower court’s ruling, made by Alameda County Superior Court Judge Frank Roesch in August 2021, found that the law conflicts with the state Constitution by restricting the Legislature’s ability to regulate its workers’ compensation system. The ruling also argued that Proposition 22 violates a constitutional provision requiring initiatives to be limited to a “single subject.�

The sweeping ruling had come as a surprise for those who study California’s ballot initiative process; experts have said courts are reluctant to challenge laws approved by voters.

Proposition 22 has remained in effect throughout the appeals process. Monday’s ruling is expected to be appealed to the California Supreme Court.

A three-judge panel in San Francisco heard the appeals case in December.

Justice Tracie L. Brown, who wrote Monday’s ruling, had during the hearing questioned the provision in the law limiting legislation related to app-based drivers’ collective bargaining rights. Brown had said she believed it was outside the scope of Proposition 22’s stated purpose and floated the hypothetical idea of striking down that one provision rather than the whole law.

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Brown, in her ultimate opinion, largely disagreed with Roesch, finding that Proposition 22 does not impede the Legislature’s workers’ compensation authority or violate the single-subject rule. She also determined that the provisions she deemed unconstitutional could be severed and invalidated without dismantling the whole law. Her opinion was supported by Justice Stuart R. Pollak.

The third appeals court judge, Jon B. Streeter, dissented, writing in his opinion that Proposition 22 usurps the Legislature’s power to create and enforce the state’s workers compensation system.

“My disagreement on this point leads me to a different overall result,� Streeter wrote. “I believe we must invalidate Proposition 22 in its entirety.�

Language in Proposition 22 aimed to block further legislative action targeted at gig companies. The law requires a seven-eighths supermajority of the Legislature to pass any amendments to the law. Monday’s ruling does not invalidate that requirement to amend the law in the Legislature.

A small group of app-based drivers and the Service Employees International Union had mounted the legal challenge to Proposition 22. Plaintiffs and the union said in an emailed statement that the appeals court decision showed powerful corporations had “hijacked� the ballot referendum process, but praised the court for knocking down provisions restricting workers collective bargaining rights.

“Every California voter should be concerned about corporations’ growing influence in our democracy and their ability to spend millions of dollars to deceive voters and buy themselves laws,� said David Huerta, President of SEIU California and SEIU United Service Workers West, in an emailed statement.

“We are grateful that the California Court of Appeal has affirmed that companies like Uber, Lyft, Doordash and Instacart can’t keep drivers from joining together in a union through their deceptive ballot measure,� said plaintiff and Uber and Lyft driver Mike Robinson. “But no make no mistake, we still believe Prop 22 — in its entirety — is an unconstitutional attack on our basic rights.�

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Proposition 22 went into effect at the beginning of 2021. App-based ride-hailing and delivery companies including Uber, Lyft and DoorDash together spent more than $200 million marketing the ballot initiative to Californians as a boon to workers and customers, promising flexible schedules, some worker benefits and low prices.

For hundreds of thousands of drivers, Proposition 22 awarded independent contractor status but took away protections enforced by a 2019 law, AB 5, requiring gig workers across many industries to be classified as employees with stronger benefits such as a minimum wage, overtime and workers’ compensation in case of injury.

Labor advocacy group Rideshare Drivers United has said drivers earnings and protections have eroded since voters approved Proposition 22. Gig companies say the opposite, that Proposition 22 has boosted drivers earnings.

Lyft spokesperson Shadawn Reddick-Smith applauded the appeals court ruling and said Proposition 22 “protects the independence drivers value and gives them new, historic benefits.�

“We’re pleased that the Court respected the will of the people, and that Prop. 22 will remain in force,� said Tony West, Uber’s chief legal officer, in an emailed statement.