California Supreme Court to Hear Challenges to Gig Worker Law

On Tuesday (May 21), the California Supreme Court will hear oral arguments in a lawsuit challenging a ballot measure known as Proposition 22.

The measure, which was approved by nearly 60% of voters in California in November 2020, allows app-based services such as Uber and Lyft to classify drivers in the state as independent contractors rather than as employees with more benefits, Reuters reported Tuesday.

The lawsuit, brought by the Service Employees International Union (SEIU) and four drivers, argues that Proposition 22 is unconstitutional, according to the report.

The central issue at stake is whether gig workers should be treated as employees or contractors, the report said. Employees are entitled to benefits such as the minimum wage, overtime pay, reimbursements for expenses, and other protections that independent contractors do not receive. Studies have shown that classifying workers as independent contractors can save companies up to 30% in costs.

Uber, Lyft and other app-based services spent over $200 million on a campaign to pass Proposition 22, per the report. They argue that without the measure, the increased costs of treating drivers as employees could force them to stop doing business in California.

A study released by researchers at the University of California, Berkeley, found that most gig drivers in major U.S. cities, including Los Angeles and San Francisco, earn significantly less than the minimum wage when considering full costs, including downtime, according to the report.

The SEIU and other labor organizations see the outcome of the Proposition 22 case as a crucial step in the campaign to secure legal protections for gig workers across the country, the report said. They said they aim to reverse what they see as a decade of exploitation of gig workers.

The legal battle over the classification of gig workers is not limited to California, per the report. Lawmakers in Minnesota recently passed a measure setting a minimum wage for gig drivers, while the top court in Massachusetts heard arguments over competing ballot proposals that would redefine the relationship between app-based companies and drivers in that state.

Additionally, the U.S. Department of Labor is facing legal challenges to a rule that would make it more difficult for companies, including app-based services, to treat workers as independent contractors, the report said.