Justices seem uncertain about gig worker measure
A state appeals court appeared uncertain Tuesday over the legality of a 2020 ballot measure — approved by the voters after a $200 million campaign by Uber, Lyft and other appbased ride-hailing and delivery companies — that classified their thousands of drivers as independent contractors rather than employees.
Proposition 22, passed by a 59% vote in November 2020, was found to be in violation of the California Constitution by Alameda County Superior Court Judge Frank Roesch in August 2021. He said the state Constitution authorizes the Legislature to grant workers’ compensation benefits, one of the employee benefits Prop. 22 denies to the drivers. And by making it virtually impossible for the drivers to organize unions to negotiate with the companies over wages and working conditions, Roesch said, the ballot measure regulated a different subject than its declared intent to protect the workers, violating the Constitution’s limitation of initiatives to a single subject.
The companies have continued to apply Prop. 22, however, during appeals by its sponsors and the state. At Tuesday’s hearing before the First District Court of Appeal, justices at times seemed to question Roesch’s conclusion that Prop. 22 interfered with legislative authority.
“If the Legislature could have adopted Proposition 22, why can’t the people, using their co-extensive power” to make law by initiative, asked Justice Jon Streeter, part of the threemember panel. Noting that courts are supposed to be “deferential” to the voters when considering initiatives, Streeter said the Legislature “has not been disabled” and, under the terms of Prop. 22, could amend the ballot measure — though the initiative requires a 7/8 majority, virtually unobtainable, for any amendments.
The 7/8 requirement is also unconstitutional, argued Scott Kronland, a lawyer for labor-backed organizations challenging the measure. He said the Legislature’s authority over workers’ compensation was established by a state constitutional amendment approved by the voters in 1918.
“It can’t be taken away without another constitutional amendment,” Kronland told the court. Such an amendment would require more signatures to qualify for the ballot than a statute like Prop. 22.
The panel also had some tough questions for defenders of the initiative, including a lawyer from Attorney General Rob Bonta’s office, tasked with defending the newly adopted law despite Bonta’s personal opposition to Prop. 22.
Justice Tracie Brown noted that collective bargaining — the right to form unions and negotiate with employers — was not even mentioned in the measure, although it amounted to a virtual prohibition.
“They had the whole thing in one proposition and they couldn’t have known this collective-bargaining provision would fall,” she said.
And Streeter said the denial of workers’ compensation benefits to the drivers “isn’t just taking out a small segment of workers. To remove a vast number of workers from the workers’ compensation system seems to me not just an alteration but a de facto dismantling of a huge portion of the benefits that in the Constitution the Legislature is charged with providing.”
Jeffrey Fisher, a lawyer for Prop. 22 supporters, replied that “the state Constitution says initiative power is reserved to the people.” If the Legislature can decide the extent of workers’ compensation coverage, he argued, “the people can make the same choices, and the California Constitution protects those choices.”
Courts must “jealously guard” the voters’ power to enact laws by initiative, said the state’s lawyer, Deputy Attorney General Jose Zelidon-Zepeda.
In addition to workers’ compensation coverage, employees, unlike contractors, are legally entitled to minimum wages, overtime pay and reimbursement for work-related expenses such as gasoline and parking fees. In 2019, state lawmakers passed AB5, setting standards that classified workers as employees if they were in the same business as the company that paid them, but Prop. 22 exempted the drivers from that law a year later.
The cities of San Francisco, Oakland and Los Angeles filed arguments with the court opposing Prop. 22.
On another front, President Biden’s Labor Department has proposed nationwide regulations that would declare workers to be employees if they were “economically dependent on their employer for work” rather than being “in business for themselves” — rules that could also nullify Prop. 22.
The regulations would replace rules adopted by President Donald Trump’s administration in 2021 that supported the companies’ classification system. On Tuesday, Bonta and colleagues from 15 states and the District of Columbia filed comments with the Labor Department backing the changes.
The Trump administration orders “shorted workers of their wages and forced them to bear the costs of routine business expenses ordinarily paid for by employers, such as costs for travel, tools, and training benefits workers, employers, and the public,” the attorneys general wrote.
The appeals court panel, which also included Presiding Justice Stuart Pollak, is due to rule within 90 days.