Battle over Prop. 22 heads to California Supreme Court

The California Supreme Court will hear arguments in a case on Tuesday that could have big implications for Uber, Lyft, DoorDash and the workers who drive for these companies.

At issue is Proposition 22, an initiative passed by state voters in 2020 that designated drivers as independent contractors rather than employees of such companies. A group of drivers and the Service Employees International Union argue that the move unconstitutionally stripped the state legislature of the ability to include such workers in California’s workers-compensation system.

Due to the way Prop. 22 is written, they argue, the court should throw out the whole measure.

The measure stripping workers-compensation protections from drivers “impermissibly conflicts with” the state constitution, the drivers and SEIU said in a brief to the court. Because of that, they said, “the initiative, by its own terms, is invalid in its entirety.”

For their part, the delivery and ride-hailing companies — acting through an interest group called Protect App-based Drivers and Services — argue that voters have the same rights as the state legislature to decide who is or isn’t covered by California’s workers-compensation system and tapped that power by passing Prop. 22.

“SEIU would have this Court hold that the Legislature has complete supremacy over workers’ compensation, unchecked by ordinary constitutional constraints,” Protect Drivers said in its own brief. “This Court should reject SEIU’s gambit to insulate legislation affecting workers’ compensation from direct democracy .”

The case, which will be argued before the court Tuesday afternoon, has been years in the making.

In 2018, in a case not directly involving delivery drivers, the California Supreme Court issued a ruling that established a new test for determining whether workers were employees or independent contractors. That case, Dynamex Operations West Inc. v. Superior Court of Los Angeles County, made it more difficult for employers to classify workers as independent contractors and exclude them from employee benefits and protections.

The following year, the state legislature passed, and Gov. Gavin Newsom signed Assembly Bill 5, which ratified the Dynamex ruling and extended it to a broader swath of workers than it originally covered. In response, a collection of app-based delivery and ride-hailing companies put Prop. 22 on the 2020 ballot and spent more than $200 million to convince voters to pass it. Voters ended up passing the initiative overwhelmingly.

But SEIU and the group of drivers soon sued to stop Prop. 22 from taking effect. A trial court in 2021 agreed with the plaintiffs and invalidated Prop. 22.

Two years later, though, a split appeals court overruled the trial court, finding Prop. 22 constitutional.

The main point of contention concerns a provision of the state constitution that grants the legislature essentially absolute power to construct a workers' compensation system “unlimited” by any other provision of the constitution. That provision was added to the constitution in 1918, some seven years after the document was amended to allow for voter-approved propositions.

The plaintiffs argue that taken together, the provision concerning workers' compensation can’t be amended by a simple proposition. Voters could amend it by approving a constitutional amendment. However, Prop. 22 was a statute, not a constitutional amendment.

Even so, Prop. 22 effectively amends that portion of the constitution, the plaintiffs argue, by declaring that drivers for app-based services are independent contractors and aren’t covered by or entitled to any protections or benefits given to employees. That implicitly includes workers' compensation.

A provision of Prop. 22 says that if a court strikes down the section declaring drivers to be independent drivers, the whole law will be invalidated. SEIU and the drivers argue that’s exactly what should happen.

For their part, the Prop. 22 advocates argue that the constitutional provision giving the legislature power to craft a worker's compensation system isn’t exclusive and that voters have the right to act to create or adjust that system.

The provision doesn’t explicitly prevent voters from enacting laws related to that system, and the court has held that voters’ initiative power needs to be given broad deference.

The court battle comes amid growing complaints among drivers for Uber, Lyft, and other such companies that their earnings have dropped significantly despite efforts by the companies to adjust their compensation based on the data they collect on such workers.