Companies that rely on the gig economy model for workers scored a big win in courts Monday after an appeals court overturned a lower court ruling that previously found Proposition 22 illegal.
Proposition 22 passed by a wide margin in November 2020, exempting app-based gig economy drivers from California’s terrible AB5 law and allowing them to continue to work as independent contractors. However, almost a year later, it was ruled unconstitutional by a California court.
But a legal challenge to that ruling carried on, and a year and a half later, those app-based companies scored a victory, according to the Wall Street Journal.
A state appeals court reversed a lower-court ruling that found a California ballot measure known as Proposition 22 illegal. Proposition 22, which passed in November 2020, allowed these companies to continue to treat their drivers as independent contractors.
Uber and others are in a global tug of war with regulators over whether and how to grant more benefits such as paid sick leave and health insurance to workers in the so-called gig economy, where apps distribute individual tasks to a pool of people whom companies generally regard as independent contractors.
A group of ride-share drivers, along with labor unions, challenged the constitutionality of Proposition 22, and the original movement to pass AB5 was largely labor union driven. But the will of the voters, many of whom either are contractors for app-based companies or related to people who are, sought to push back on that legislation, which would have crippled those businesses and forced job losses.
AP Photo/Rich Pedroncelli
The ruling is part of a much larger fight that isn’t just restricted to California. House Democrats in Washington D.C. have also sought to pass similar legislation based on the California model, which would serve as a big win for labor unions at the expense of workers. At the time of the original fight over AB5, Uber and Lyft threatened to suspend their business in California rather than completely upend their business model.
Similar devastating results could be seen throughout the country if the Democrats are ever able to force a measure like that nationwide.