California Supreme Court rejects challenge to gig worker law

The California Supreme Court struck down a challenge to Proposition 22, which allows certain app workers to be classified as independent contractors, in a unanimous decision on Thursday, but declined to rule on whether the initiative improperly constrains the Legislature's authority to enact future legislation.

The opinion written by Associate Justice Goodwin H. Liu said that the initiative, which was passed by voters in 2020, does not conflict with Article XIV Section 4 of the state Constitution, which gives the Legislature unlimited plenary power to create and enforce a workers' compensation system through legislation.

"According to the Attorney General, the sole provision at issue in this case, section 7451, does not itself conflict with article XIV, section 4 because the latter provision does not assign the Legislature sole authority, to the exclusion of the initiative power, to govern workers' compensation," Liu wrote. "We agree [...] because the latter provision does not preclude the electorate from exercising its initiative power to legislate on matters affecting workers' compensation." Castellanos v. State of California et al., S279622 (Cal. S. Ct., filed April 21, 2023).

The plaintiffs were represented by Scott A. Kronland of Altshuler Berzon LLP in San Francisco, who redirected requests for comment to his clients.

The challenge came from the Service Employees International Union and rideshare drivers who claimed that the initiative enriched app-based service companies like Uber, Lyft and DoorDash at the expense of workers by denying them benefits that full-time employees would be entitled to, including minimum wage, overtime and sick leave. Alameda County Superior Court Judge Frank Roesch struck the initiative down in 2021 on constitutional grounds before a divided Court of Appeal panel reversed his ruling in 2023.

"We're disappointed in today's ruling," the union's executive director in California, Tia Orr, said in a statement. "Still, we are hopeful that an earlier ruling which validated the state legislature's authority to pass laws enabling rideshare drivers to join together in a union gives workers a path to collectively bargain for better pay, benefits and protections. Gig workers are determined to ensure fairness in the gig economy and won't stop fighting to win greater workplace rights and protections on the job."

Glenn Spencer, senior vice president of the U.S. Chamber of Commerce's Employment Policy Division, called the decision "a win for workers who choose independent contracting for its greater work-life balance, flexibility, and the opportunity to be their own boss."

"It's a win for California consumers who benefit from services provided by independent workers and digital platforms," Spencer wrote in a statement. "Congress, other state legislatures, and government agencies should take note," he continued. "The U.S. Chamber will continue to protect economic opportunities for independent contracting, including in our recent lawsuit against the Department of Labor's rule that threatens this freedom."