Published
July 26, 2024
In what can only be seen as a final, vindicating victory, the California Supreme Court ruled unanimously (7-0) on July 25 that Proposition 22 is constitutional, thereby preserving flexibility for workers using on-line platforms to pursue earning opportunities.
Proposition 22 was a November 2020 California ballot initiative that preserved the ability of gig companies such as Uber, Lyft, Instacart, and Doordash to continue using an independent contractor model in exchange for these companies providing certain benefits to the independent contractors connected to their apps. Because Proposition 22 allowed for the independent contractor model to continue, it was vigorously opposed by unions and other advocates. After the ballot initiative won a majority, those same parties took their fight to the courts to try and overturn the will of the voters.
The California Supreme Court’s decision hinged on whether Proposition 22 prevented these workers from ever receiving workers’ compensation. The decision held that the ballot initiative did not prevent this, and that the state legislature has the power to determine who can receive workers’ compensation. The U.S. Chamber filed an amicus brief that supported the position taken by the California Supreme Court.
Ironically, the case, Castellanos, et al. v. State of California, represents the California Supreme Court giving and the California Supreme Court taking. This whole issue began in April 2018, when the Court issued the controversial Dynamex decision, which adopted a strict “ABC” test for establishing whether a worker is an independent contractor or employee. In 2019, the California legislature quickly codified the new “ABC” test in a law called AB-5. The severe restrictions to the independent contractor model imposed by AB-5 forced the companies most directly impacted by it to launch Proposition 22 in an effort to bring the issue to the voters of California, who ultimately supported the ballot initiative by a strong margin of 58-41. The Castellanos decision also validated California’s expansive ballot initiative process to pass new laws and amend existing ones.
This, of course, is not the complete end of the story. Proposition 22 provided relief from AB-5 for the gig companies, which were its primary targets, but the law unfortunately still applies to other independent workers, such as freelancers. More work remains to restore their opportunity to continue operating as they prefer.
About the authors
Marc Freedman
Marc Freedman is vice president of workplace policy at the U.S. Chamber of Commerce. He develops and advocates the Chamber’s response to OSHA matters; FLSA issues such as overtime, minimum wage, and independent contractors; paid leave issues; EEOC, and other labor and workplace issues.
