California Judge Declares Uber and Lyft Gig Worker Prop 22 Unconstitutional

Prop 22 Unconstitutional

On Friday August 20^th, 2021, Alameda County Superior Court Judge Frank Roesch overturned California Proposition 22 (Prop 22) in its entirety, ruling the proposition was unconstitutional. Prop 22 had taken effect in California in January of 2021, after passing through ballot initiative in 2020.

Uber and Lyft have stated they intend to appeal the judges findings, releasing statements complaining heavily about the ruling.

Prop 22 Contractor Rules

Prop 22 was a hard fought political battle for Uber, Lyft and other “gig economy” employers.  They spent $200 million, the most ever for a California proposition, to entice voters to agree to let them ignore expensive labor laws. Employers covered under Prop 22 could ignore normal benefits and job protections such as unemployment insurance, paid sick leave and other expenses normally incurred in hiring.

California had previously passed AB 5, a law that would make rideshare drivers employees. The result would mean hundreds of millions in costs for Uber and Lyft, including paying unemployment insurance as other employers do, for drivers that might later make a claim for unemployment benefits.

The University of California released a report stating rideshare companies would have paid $413,000,000.00 over 5 years in California unemployment contributions, had drivers been always classified as employees. When these contributions are unpaid, it leaves California with less funds to cover large unemployment waves such as the one that occurred during the pandemic recession.

California has a tax rate for new employers of 3.4% of their pay, up to a limit of $7,000 per year per employee in earnings.  The resulting estimate of $400 million is based on this calculation and California driver earning estimates. The report also estimated the amount owed for 5 years in New Jersey: $119 million.

The data from the labor center, 2014-2018 CA unemployment taxes not paid by rideshare employers:

AB 5 – Uber Lyft Drivers are Employees

AB 5 was passed and signed into law in September 2019. AB 5 changed the California Labor Code to ensure the end of the practice of making “gig jobs” independent contractors vs employees. The law notes these conditions are required to continue labeling staff as contractors:

1. The person is free from control and direction in connection with the performance of work, both under contract and in execution of the work.
2. The person performing the work is outside the usual hiring entities business.
3. The person is customarily independently performing the work that is being performed for the business. This means the person regularly engages in this type of work, independently.

Uber and Lyft sued to stop AB 5 from classifying drivers as employees, before pivoting to passing Prop 22 in California. Uber and Lyft have both released statements that the judges ruling does not affect current law, as they will seek stays of the ruling during appeal.

Lyft and Uber Sexual Assault

Uber had previously released partial data regarding 6,000 reported sexual assaults during a two year period. Uber has not released new data since. Lyft has never released data regarding sexual assault despite claims they would do so.

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Regardless of the status and ultimate fate of Prop 22 in California, Levin Simes represent those assaulted during a rideshare, in California and in any state in the United States.

Levin Simes is helping lead the litigation coordinated in San Francisco against Lyft for sexual assaults,  occurring in California and across the United States. Levin Simes has requested coordination for Uber sexual assault cases in San Francisco as well, including cases occurring in any state.

To date Levin Simes has worked with survivors in 49 of the 50 states, and survivors in the District of Columbia.  Talk to an attorney at Levin Simes for a free and private consultation regarding Uber and Lyft.

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