Proposition 22, California’s gig workers law, which allows companies like Uber and Lyft to treat workers as independent contractors – not employees – has been ruled unconstitutional and unenforceable by a Superior Court judge.
Voters approved the law as ballot initiative Proposition 22 in November, with companies like Uber, Lyft and DoorDash spending more than $200 million to campaign for the measure. Labor organizations, including the Service Employees International Union, opposed it.
Proposition 22 passed with 59% of the vote and was backed by a 4-1 margin by rideshare drivers who favored the flexibility given to them by the law.
In January, a group of Uber and Lyft drivers, along with the SEIU, filed a lawsuit seeking to have the measure overturned. The law exempts gig employers from providing benefits and protections to workers, but requires that they offer healthcare subsidies and minimum hourly earnings.
California Superior Court Judge Frank Roesch issued a ruling late Friday, that the law illegally “limits the power of a future legislature to define app-based drivers as workers subject to workers’ compensation law,” adding that “The entirety of Proposition 22 is unenforceable.” He also ruled that it was unconstitutional to that the law required any future amendments to have a seven-eighths vote of approval to pass the legislature.
Judge Roesch took issue with the part of the law that requires any future California state law concerning collective bargaining for gig workers to comply with the Prop 22 law. “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,” he wrote.
However all of the provisions of Prop 22 will remain in effect until the appeal process is complete.
Geoff Vetter, a spokesperson for the Protect App-Based Drivers and Services Coalition (PADS), which includes Uber, Lyft, DoorDash, and Instacart, said in a statement emailed to The Verge that they plan to appeal. The judge “made a serious error by ignoring a century’s worth of case law requiring the courts to guard the voters’ right of initiative,” Vetter wrote, noting that a majority of California voters had approved the measure.
Bob Schoonover, president of SEIU California State Council praised the judge’s ruling in a statement emailed to The Verge.
The ruling caused investors to dump shares of both companies, with Lyft declining as much as 4% and Uber falling up to 2.77% by Monday.
Both companies are supporting a similar measure in Massachusetts that is expected to be on the ballot next year. New York is also looking into the matter.