California's Proposition 22 is ruled unconstitutional

Proposition 22 (a 2020 California ballot initiative) defined app-based, gig-drivers as independent contractors rather than employees. Supporters of Proposition 22 spent over US$200 million on the campaign in the most expensive initiative battle in the state's history. This initiative statute passed with nearly 59 percent of the vote. Now, a California state trial judge has declared that Proposition 22 is unconstitutional.   

The key provision of Proposition 22 provided that "notwithstanding any other provision of law, including, but not limited to, the Labor code, . . ., an app-based driver is an independent contractor and not an employee or agent with respect to the app-based driver's relationship with a network company if [certain] conditions are met." According to the court, this directly conflicted with the California Constitution's grant of absolute power to the state legislature to create and implement the workers' compensation system, a part of which requires defining which type of worker is protected by those laws. Because the workers' compensation system currently covers only employees and not independent contractors, Proposition 22 essentially removed app-based drivers from that system by initiative statute and not a constitutional amendment. Therefore, the legislature was unconstitutionally denied its power to determine which workers are covered by workers' compensation.

The proposition also ran afoul of the state Constitution by prohibiting the legislature from passing future legislation that would authorize app-based drivers to collectively bargain with rideshare companies. 

As expected, rideshare companies have already indicated that they will appeal the ruling, setting the stage for a potential showdown before the state's high court.