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California Supreme Court ponders gig driver exemption from labor law

The justices appeared skeptical about the union's position that, when it comes to workers' compensation law, California's Legislature has unlimited power and couldn't be overruled by ballot initiatives.

(CN) — The California Supreme Court on Tuesday heard arguments from a group of Uber and Lyft drivers backed by the Service Employees International Union who are challenging Proposition 22, the voter-approved law that exempts gig drivers from being classified as employees.

The drivers and the union claim that Proposition 22, which was backed by Uber, Lyft, DoorDash and other app-based delivery businesses and approved by California voters in 2020, violates the state Constitution because it "permanently restrains the Legislature from exercising its constitutionally conferred plenary and unlimited authority to establish and enforce a complete system of workers’ compensation for these workers."

When it comes to workers' compensation, which provides employees with pay and medical benefits when they get injured on the job, the California Legislature has unlimited power, according to the union. But the voter-backed law tramples on that by excluding gig drivers from the protection, the union says.

"Proposition 22 impermissibly conflicts with Article XIV of the Constitution by preventing the Legislature from providing complete workers compensation protections to about 1 million app-based drivers," Scott Kronland, an attorney representing the drivers and the union told the court.

The only way to get around that obstacle, according to Kronland, was a constitutional amendment to restrict the lawmakers' exclusive power over workers' compensation legislation, not a ballot initiative that creates new workers' compensation exclusions.

However, the idea that the power of the electorate to initiate laws, which in California is considered to be just as broad as that of the state's Legislature, was somehow restricted in this particular area and that lawmakers had unlimited power over workers' compensation legislation raised some eyebrows from the bench.

"What does 'unlimited' mean in this phrase?" Associate Justice Goodwin Liu asked. "Unlimited by the governor's signing authority and ultimate veto authority? Is that encompassed by 'unlimited?'"

And in response to Kronland's suggestion it means what voters intended it to mean when they approved the constitutional amendment in 1918 that gave the Legislature unlimited power over workers' compensation law, Liu wondered what the attorney's evidence was that voters back then had intended to exclude their own initiative power from any future workers' compensation laws.

Associate Justice Joshua Groban also was puzzled by the union's interpretation of the "unlimited" power in the 1918 constitutional amendment in so far as it implied that voters gave lawmakers unrestricted power to pass any law when it came to workers' compensation, even otherwise unconstitutional ones such as limiting workers' comp to men only, the justice observed.

"It's a highly technical parsing of what the voters must have thought in the early 1900s, because under your reasoning, anything that abrogates something as substantive as the equal protection clause was fair game to be cast aside," Groban said.

Indeed, the state claims in response to the union's argument that the California electorate can enact legislation by initiative on virtually any subject, including workers’ compensation. Even if the Legislature has this “plenary power," according to the state, the California Supreme Court has recognized that this doesn't make the Legislature's power "exclusive."

This position was echoed by Jeffrey Fisher, an attorney for Protect App-Based Drivers + Services, a coalition of business groups and companies, including Uber, Lyft and DoorDash, that intervened in the case to defend Proposition 22.

"Whatever the Legislature can do, the people can do," Fisher told the court.

The justices didn't indicate how they would rule, and Chief Justice Patricia Guerrero said the court was still waiting for additional briefing before it would consider the matter submitted.

A study released Monday by the UC Berkeley Labor Center found that, in spite of Proposition 22 sponsors' arguments that the law would benefit gig drivers, Uber, Lyft, Grubhub, and other delivery drivers in California earn well below the state's minimum wage. Moreover, Uber and Lyft drivers in California, according to the study, earn less than their counterparts in Boston, Chicago, and Seattle. 

“A deep dive into the data shows that the majority of gig drivers would earn more if they were categorized as employees, not independent contractors,” said Ken Jacobs, co-chair of the UC Berkeley Labor Center and one of the report’s authors. “Gig drivers are getting a raw deal.”

The hearing before the state's top court is the latest round in the litigation between the gig industry and organized labor, and their various proxies, since California lawmakers passed Assembly Bill 5 in 2019.

AB 5 codified the criteria for classifying workers as employees rather than independent contractors and it entitled the hundreds of thousands of gig drivers in California to a slue of labor protections, including minimum wage and paid sick leave, as well as unemployment and workers' compensation benefits.

Uber is still fighting enforcement of AB 5 before the Ninth Circuit Court of Appeals, where it argued in March before an en banc panel of 11 judges that the law unfairly singles out some gig-economy businesses because it was motivated by lawmakers' animus toward companies that have upended the traditional labor market while allowing for a myriad of exemptions for other help, such as handymen or dog walkers, that can be hired through an app.

The en banc federal appellate court hasn't yet issued its decision. A three-judge panel of the court, in a decision that was vacated last year agreed that Uber had made a tenable case that its exclusion from the wide-ranging exemptions, including for comparable app-based gig companies, could be attributed to animus rather than reason.

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Categories / Appeals, Courts, Employment, Regional

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