California Supreme Court taking up Proposition 22 challenge from gig drivers, labor unions

California’s highest court has agreed to hear a challenge to Proposition 22, the controversial 2020 ballot measure that classified gig drivers as independent contractors rather than employees.

A group of union-supported drivers asked the California Supreme Court to hear their case back in April. They hope the court will strike down an appeals court ruling from March that determined Prop. 22 could stand as state law — a significant win for California’s ride-hailing and food delivery industry.

“I’m grateful that the California Supreme Court is reviewing the case,” said gig driver Hector Castellanos, one of the plaintiffs in the case, in a statement Wednesday. “We are hopeful it will defend our state’s Constitution so that gig workers are treated with dignity and respect.”

The court has yet to set a date for oral arguments.

“We remain confident that the court will uphold Prop. 22 to protect the people’s right of initiative and the overwhelming will of California voters,” read a statement released Wednesday by the Protect App-based Drivers and Services Coalition, which supports Prop. 22.

Attorneys for the drivers have previously argued that because the California Constitution requires the Legislature to enforce a “complete” workers’ compensation program, carving out independent contractors violates that mandate. If the Prop. 22 supporters wanted to change employment benefits law, they would have needed to do so through a constitutional amendment, opponents argue.

“You have a number of factors that are pointing in favor of the court taking review,” said Stacey Leyton, legal counsel for the plaintiffs, in a previous interview with The Sacramento Bee. “This was a major statewide initiative, and it’s really important for the California Supreme Court to resolve whether it was valid or not.”

The PADS coalition says that the Supreme Court has previously settled the question of whether voters can enact policies through ballot initiatives that the state constitution reserves for “the Legislature.”

“This case is about the voters’ initiative power. Did the voters have the constitutional authority to enact Prop. 22 in the first instance?” said Kurt Oneto, legal counsel for PADS, in an earlier interview. “You can find cases that are a century old and you can find cases from the last few years where the California Supreme Court has held that the power of the Legislature and the power of the voters is co-equal.”

The Supreme Court’s decision to hear the case could potentially add years to the already drawn-out battle over gig worker classification.

The saga began with a 2018 California Supreme Court decision that made it more difficult for companies to hire workers as independent contractors rather than employees. The court’s unanimous embrace of the “ABC test” abandoned three decades of legal precedent and led to a slew of criticism from business groups.

In an effort to codify the court’s ruling and provide some clarity, the Legislature passed Assembly Bill 5 a year later. The bill broadly redefined an employee as a worker who performs duties that are central to a company’s business. Gig companies lobbied hard against the bill and responded to its passage with Prop. 22.

Voters approved the initiative in November 2020 after businesses like Uber and Lyft poured more than $200 million, a record-setting amount, into the campaign and threatened to cut services in the state. The measure exempted app-based gig workers, such as drivers for DoorDash and InstaCart, from state laws that required businesses to hire more workers as employees rather than independent contractors.

The following year, workers supported by the Service Employees International Union sued the state twice — once in the Supreme Court and once in Alameda Superior Court — on grounds that the proposition unconstitutionally prevented the state from overseeing the workers’ compensation system.

Ride-hailing drivers, backed by SEIU, sued the state in early 2021 arguing that the initiative violated the state constitution by infringing on the Legislature’s authority to enact a workers’ compensation program and by requiring a seven-eighths majority by lawmakers to amend AB 5 — a nearly impossible threshold. An Alameda judge agreed with the workers and ruled in August 2021 that the law was unenforceable and unconstitutional.

The appellate justices in March determined that Prop. 22 did not violate the California Legislature’s power over workers’ compensation, nor did it violate the “single-subject” rule that limits the scope of ballot initiatives to one single issue.

The ruling did overturn the seven-eighths majority requirement for any legislation that would allow gig workers to unionize. The court said the language violated the separation of powers principle.

Although the appellate court determined that Prop. 22 did not violate the Legislature’s power over workers’ compensation, Justice Jon B. Streeter disagreed and gave the measure’s opponents some hope going into their Supreme Court appeal.

“I believe we must invalidate Proposition 22 in its entirety,” Streeter wrote in his dissent.