Prop 22 Ruled Unconstitutional. Now What?

Written by:

Alex Guney

Last month, an Alameda Superior Court Judge ruled that Proposition 22 was unconstitutional and unenforceable.  While app-based drivers may have won this battle, their war to be classified as employees is far from over—especially as Uber, Lyft, and other gig service providers attempt to enact legislation similar to Prop 22 across the county.

Prop 22 was a successful ballot initiative that defined app-based drivers as independent contractors, and not employees, if certain conditions were met.  The ballot initiative was in direct response to Assembly Bill 5, which codified a presumption that a worker is an employee, unless the hiring entity could prove three circumstances were present (dubbed the ABC test).  The ABC test was developed by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court and threated the gig business model, which depended on the app-based drivers being classified as independent contractors.

Prop 22 provided a new framework for determining when an app-based driver may be classified as an independent contractor. Specifically, if the company (1) does not unilaterally set specific requirements for the dates and times of day, or minimum number of hours, the driver must work; (2) does not require the driver to accept specific service requests; and (3) does not restrict the driver from working for other companies (ride-share or otherwise), then the app-based driver may be classified as an independent contractor.  Bus. & Prof. Code § 7451.

In February of this year, a group of Uber and Lyft drivers, along with the Service Employees International Union, filed a petition for writ of mandate, asking a California court to rule that Prop 22 violates the State’s Constitution. Judge Frank Roesch of the Alameda Superior Court agreed with the drivers and ruled that Prop 22 is unconstitutional and unenforceable. First, the court ruled that Prop 22 imposed an unconstitutional limitation on the Legislature’s ability to exercise its plenary power to determine which workers must be covered by the workers’ compensation system.  Second, Prop 22 applied conditions to the Legislature’s ability to amend the new law, which the court also found unconstitutional.  Because the limitation on the Legislature’s ability to exercise control over the workers’ compensation system could not be severed from the remainder of the statute, “the entirety of Proposition 22 is unenforceable.”

In practical effect, the court’s order may be a victory for app-based drivers in name only.  It is very likely that the proponents of Prop 22 will appeal that court’s order, and in turn, request that the effects of the court’s order be stayed during the pendency of the appeal.  This means that Prop 22 will remain in effect while the case makes its way through the appeals process.  But the order ruling Prop 22 unconstitutional would not have resolved the issue of how to classify app-based drivers.  Even absent Prop 22, determination of whether app-based drivers are independent contractors would revert back to the ABC test.  On the journey to be classified as employees, the ETA for app-based drivers is TBD.

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