The California Supreme Court explicitly left open the question of whether state lawmakers can extend the workers’ compensation system to include app-based workers, saying only that the voter amendment, known as Proposition 22, doesn’t unduly encroach on the legislature’s constitutional power to oversee that system. The court didn’t weigh in on the limits to the power of voters to legislate on workers’ compensation through California’s unique ballot initiative process, said David A. Carrillo, executive director of Berkeley Law’s California Constitution Center.
“The action now returns to Sacramento, and any future challenges to Prop 22 will be shaped by whatever the legislature does in response to Castellanos,” Carrillo said.
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California justices reasoned Thursday that the law doesn’t wrongly curtail the legislature’s power over worker protections. Voters can pass initiatives on matters that impact the workers’ compensation system, Justice Goodwin H. Liu wrote in the unanimous opinion.
Normally, classifying a worker as an independent contractor would exclude them from receiving workers’ compensation benefits if they are injured on the job. But California lawmakers have made several exceptions to extend the system to non-employees, such as volunteers for private, non-profit organizations, Liu noted, declining to express a view on whether that route would be feasible here.
“Does the legislature almost take a hint and say maybe there is something we can do here, not to overturn Prop. 22, but conceivably to extend some sort of workers’ compensation benefits to drivers?” said Gary McLaughlin, a partner with Mitchell Silberberg & Knupp LLP.
Potential Legal Challenges
California’s voter power to pass new laws and amend existing ones, without the legislature or governor’s input, is uniquely strong. Its limits were tested twice this term, with the top court blocking an anti-tax ballot measure in June that it saw as too powerful.
Still, the cases combined show that the California Supreme Court upholds voter initiatives whenever possible, Carrillo said.
And the default rule in California is that the legislature can’t amend a voter-passed initiative.
But Prop 22 itself, in a section left untouched by the Thursday ruling, does enable lawmakers to amend the initiative with a seven-eighths majority vote.
That requirement hasn’t been tested in court yet and could draw legal challenges if it’s seen as restricting the legislature’s power to oversee the worker’s compensation system, granted to them by California’s constitution.
“As the Attorney General noted in its briefing, that requirement may be ‘constitutionally problematic’ if it curtails the legislature’s constitutional powers over workers compensation—which you can’t do with a statutory initiative like Prop 22,” Carrillo said.
Further, the court didn’t rule on whether a law that grants gig workers entry into the workers’ compensation system would be even considered an amendment, subject to any extra restrictions. A judge could find that Prop 22 left open that possibility, McLaughlin said.
Workers’ Path Forward
As DoorDash, Uber, and Lyft’s leaders celebrated the win on Thursday, drivers rallied to press the California legislature to expand their protections and access to workers’ compensation.
“I have been a driver for both Lyft and Uber for close to 8 years. With over 25,000 rides under my belt, the personal physical risks as a driver are a reality,” said Carlos Pelayo, an Uber driver from San Diego in a Thursday news release by Rideshare Drivers United. “There is always a potential life threatening incident a drive away.”
Passenger app drivers make a median wage of about $5.97 per hour without tips in California when factoring all work time, gas, and vehicle weathering, according to a May University of California at Berkeley study.
Many also renewed calls to unionize to push for better pay and benefits, following the ruling. Hector Castellanos, the plaintiff in the case, said the ruling “only strengthens our demand for the right to join together in a union.”
Still, some app-based drivers celebrated the ruling. Stephanie Whitfield, a Coachella Valley-based driver who says she relies on flexible contract work to supplement her substitute teaching income, said at a press conference for Protect App-Based Drivers and Services that it was a “huge, huge sigh of relief.”
Companies can afford to pay more, said Michael Reich, a Berkeley labor economist who was hired as an expert by California’s Attorney General during litigation over the California worker classification law that sparked Prop 22. Chicago and New York City fares have risen about the same since New York adopted a pay standard in late 2023, he said.
“This is not good for protections that workers have enjoyed and obtained over many decades,” Reich said.
The case is Castellanos v. California, Cal., No. S279622, 7/25/24.
