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California Judge Throws Out Gig Worker Law

By Andrew Leonatti on August 25, 2021 | Last updated on September 19, 2021

Late last week, a California judge threw out the state's controversial "gig workers law." The ruling casts massive uncertainty on the state's large gig economy and the status of workers for companies like Uber, Lyft, DoorDash, Grubhub, and Instacart.

Unconstitutional and 'Unenforceable'

Approved by voters last November as Proposition 22, the new law exempted ride-share and food delivery drivers from California labor law, maintaining their status as independent contractors who received a limited set of benefits. The election battle saw gig companies spend more than $200 million in favor of the referendum.

A group of Uber and Lyft drivers, along with the Service Employees International Union (SEIU), filed a lawsuit challenging the law earlier this year. And in his ruling, Alameda County Superior Court Judge Frank Roesch said the law constrained the California legislature's ability to make gig drivers eligible for workers' compensation, a power granted to them in the California Constitution. He also ruled that a separate provision of Prop. 22 that prevented these workers from unionizing violated a constitutional provision limiting referendums to a single subject.

The ban on unionizing "appears only to protect the economic interest of the [gig] companies in having a divided, un-unionized workforce, which is not a state goal of the [law]," Roesch wrote, in ruling the law unconstitutional and "unenforceable."

What Happens Next?

One thing for certain is that the gig companies will fight back. "We will appeal, and we expect to win," said Uber spokesman Noah Edwardsen.

University of California at Berkeley law professor Catherine Fisk told the Los Angeles Times that Uber and other gig companies would likely win a stay of the ruling sometime in the next two weeks. That means all the provisions of Prop. 22 would remain in effect while the appeals process works its way through the courts. (Fisk expects the issue to eventually reach the California Supreme Court.)

Geoff Vetter, a spokesman for the Protect App-Based Drivers and Services coalition, said the law already remains in effect without a stay. That was countered by Stacey Leyton, a lawyer for the drivers, who said the law is currently invalid. If that is the case, the gig companies might have to start making workers' compensation payments.

If the companies eventually lose their appeal, it could mean having to classify drivers as employees, who under California law would be entitled to health insurance, sick leave, unemployment insurance, and other benefits.

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