Not So Fast: California Judge Strikes Down Proposition 22, Finding That Rideshare and Delivery Drivers Are Employees—Not Independent Contractors

By Kevin M. Brown and Gina L. Miller

The road to independent contractor status for rideshare and food delivery drivers working for companies like Uber, Lyft, and Grubhub in California has been neither smooth nor inexpensive. After spending more than $200 million last year bankrolling the ballot initiative, they just hit a significant speedbump in the form of a recent ruling that Proposition 22 is unconstitutional. 

The origins of the dispute about independent contractor versus employee status for these workers trace back to the California Supreme Court’s landmark, unanimous decision in Dynamex Operations W., Inc. v. Superior Court (2018) 4 Cal.5th 903, which established the “ABC” test that is now utilized in many jurisdictions to distinguish employees from independent contractors. The ruling was later codified and expanded by the California Legislature through Assembly Bill 5. Under the ABC test, the independent contractor drivers were reclassified as employees. Proposition 22 followed in 2020; this voter-approved initiative, which received millions of dollars of backing from rideshare and food delivery companies, passed by a wide margin in November 2020 and provided an independent contractor exception for “app-based” drivers. The Plaintiffs, Service Employees International Union and several rideshare drivers, subsequently attempted to take their case directly to the California Supreme Court in January 2021, however, the Court declined to hear the case and directed the Plaintiffs to file it in the appropriate lower court.

Heeding the Court’s direction, the Plaintiffs did just that and on Friday, August 20, 2021, California Superior Court Judge Frank Roesch ruled on a lawsuit challenging the constitutionality of Proposition 22. In a 12-page ruling, the Alameda County Judge wrote that Proposition 22 illegally infringed on the California Legislature’s constitutional authority and plenary power to decide the coverage of the state’s worker’s compensation system. He reasoned that employees are covered by worker’s compensation, while independent contractors are not, and Constitutional amendment—not “initiative statute”— is the appropriate method to restrict the Legislature’s power.

The Proposition 22 backers indicated they would appeal the decision; the measure will remain in effect pending the outcome of that appeal. And while that penultimate review would be heard by the First District Court of Appeal, Californians will have to wait for what is likely to be a final ruling by the California Supreme Court to learn the fate of their app-based drivers. 

The case is Hector Castellanos, et al. v. State of California, et al., Case Number S266551.