After years of litigation, the California Supreme Court upheld Proposition 22, a voter-approved law allowing app-based drivers to work as independent contractors. The Court rejected a challenge by a group of labor unions, which argued that the law violated the state constitution. The Court’s decision means that the status quo will hold for app-based services. App-based platforms can continue operating as before, and app-based drivers can continue to work as independent contractors.

What is Proposition 22?

Proposition 22 is a law about work conditions for app-based drivers. It says that the drivers are independent contractors when, among other things, they can control their own work schedules, use multiple apps, choose their own jobs, and work in other “lawful” positions. It also gives the drivers certain benefits, such as minimum pay, insurance against injuries, and money for healthcare. In effect, it allows the drivers to retain their contractor status while also receiving benefits that contractors do not usually get.

Who was challenging Proposition 22?

Shortly after Proposition 22 took effect, it was challenged in court by a group of labor unions. The unions argued that the law violated the California constitution in several ways. Most important, they said it interfered with the state legislature’s power to pass workers’ compensation legislation.

That argument involved two parts of the constitution:

• First, article II, section 10 of the constitution allows voters to adopt a new statute by passing a ballot initiative. It also says that the legislature can amend such a statute only if the voters allow amendments. In other words, the legislature cannot change statutes passed by initiative unless the voters agree.

• Second, article XIV, section 4 gives the legislature “plenary” power to adopt a workers’ compensation system. And that power is “unlimited” by any other constitutional provision.

The union argued that Proposition 22 interfered with the legislature’s power under article XIV, section 4 in two ways. First, the unions said that Proposition 22 changed the existing workers’ compensation system. Proposition 22 classified app-based drivers as independent contractors—thus excluding them from coverage. Second, the unions said that Proposition 22 prevented the legislature from adding the drivers back into the system. Under article II, section 10, the legislature could not amend an initiative statute without the people’s consent. And any law that folded app-based drivers into the workers’ compensation system would amend Proposition 22. That meant the legislature couldn’t use its “plenary” constitutional power.

In 2021, an Alameda County trial court agreed with the union. But in 2023, a court of appeal reversed that decision. The court of appeal held that voters had the same power as the legislature to pass workers’ compensation laws. And nothing in Proposition 22 stopped the legislature from passing new workers’ compensation laws in the future.

What did the Supreme Court decide?

The California Supreme Court agreed. It explained that voters, like the legislature, can pass laws about workers’ compensation. Voters generally can pass initiatives on any subject on which the legislature has the ability to legislate. And workers’ compensation is no different. Both the voters and the legislature can pass laws on workers’ compensation.

Nor did Proposition 22 necessarily stop the legislature from passing a new workers’ compensation law for app-based drivers. Nothing on Proposition 22’s face prevented the legislature from extending the existing system to cover them. Nor had the legislature even tried to do that. So, there was no conflict for the court to resolve; the issue was not yet ripe.

The Court left open the possibility that Proposition 22 might conflict with some future law. But again, no such law has been passed. And if and until one is, the Court does not need to weigh in.

What happens now?

The Court’s decision is good news for app-based platforms and drivers in California. It means that the current legal structure will stay in effect. Platforms and drivers will have stability and certainty in California, the nation’s biggest market.

Going forward, there may be a push for new legislation in Sacramento. The Court left open a path for the legislature to pass new workers’ compensation laws affecting app-based drivers. Some lawmakers may see that path as an invitation. WPI will be following those developments closely.