Gig Drivers Win the Right to Unionize in California

Business|Gig Drivers Win the Right to Unionize in California

Drivers for gig companies like Uber and Lyft gained the right to unionize in California on Friday, thanks to a bill signed by Gov. Gavin Newsom.

The bill allows unions representing drivers to bargain for better wages and benefits and could serve as a model for other states given the size of California’s ride-hailing industry — about 800,000 drivers, according to the bill’s backers. Only Massachusetts has a similar law, which was passed through a ballot measure last year.

The bill could help resolve a yearslong fight in which driver groups have pushed for employee status, which confers protections like a wage floor and the right to unionize, while gig companies resisted. Those companies have long maintained that workers should be considered independent contractors and said that making drivers employees would upend their business models.

The California law combines elements of both approaches, preserving the idea that drivers are independent contractors while giving them the ability to bargain collectively. The companies did not oppose the bill.

When blessing the legislation in August, Mr. Newsom emphasized the way business and labor had found common ground. On Friday, he took the opportunity to land a dig at President Trump.

“Donald Trump is holding the government hostage and stripping away worker protections,” Mr. Newsom said in a statement. “In California, we’re doing the opposite: proving government can deliver — giving drivers the power to unionize while we continue our work to lower costs for families.”

Under the bill, if 10 percent of California’s ride-share drivers indicate their support for a union through authorization forms, the union can file for an election to represent all of the state’s drivers. Alternatively, a union could be certified to represent drivers without an election by gathering support from a majority of drivers, or from 30 percent of drivers if no other group comes forward to demonstrate 30 percent support for challenging it.

The bill features a form of organizing known as sectoral bargaining, in which workers negotiate with many companies at the same time, not just with a single company.

The approach is uncommon in the United States, though one of the bill’s chief backers, the Service Employees International Union, has successfully pushed for legislation that brings workers and companies together to set a minimum wage and health and safety rules across the state’s fast food industry.

One advantage of sectoral bargaining for unions is that it makes it easier to raise pay and benefits in industries with many small workplaces, whereas organizing location by location would be cumbersome. The approach also makes it easier to bargain for workers who shift between companies or work for multiple companies, as is true for many who drive for both Uber and Lyft.

“Bargaining at the industry level raises standards on wages and benefits for all workers, and levels the playing field so companies are competing on quality, not just driving down labor costs,” Tia Orr, the executive director of S.E.I.U. California, said in a statement.

Some labor activists expressed concern that the bill continued to classify drivers as independent contractors rather than employees. Employees are automatically eligible for overtime pay, unemployment insurance and workers’ compensation, while contractors are not.

Uber and Lyft argue that contractor status is necessary to preserve the flexibility that attracts drivers to the service, not just to protect their business model. The California bill “does not take away what drivers value most: independence and flexibility,” Uber said in a statement.

The fight over driver classification and labor rights has been hotly contested in California over the past decade. A 2018 state supreme court ruling required, in effect, that drivers be classified as employees for the purposes of minimum wage, overtime and similar rules. A state law that passed the following year extended the ruling to apply to other protections, like unemployment insurance and workers’ compensation.

But in 2020, California voters exempted gig drivers from the law by passing a ballot measure, known as Proposition 22, which gig companies spent roughly $200 million to promote. Prop. 22 put in place a wage floor and benefits like a health care stipend, but some advocates say drivers’ wages have fallen in recent years because the floor doesn’t account for the time they spend waiting for rides or for all their expenses.

A study commissioned by a group that included Uber and Lyft found that app-based drivers in California made about $37 an hour in 2023, not including expenses or time spent waiting for a ride.

Lorena Gonzalez, the head of the state’s labor federation, said the new bill was a step forward given the constraints imposed by Prop. 22, which ensures that drivers will not have employment status. But she cautioned other states not to accept the measure as the limit of what’s possible.

“We were basically hamstrung — it’s really a distinction between us and other states,” said Ms. Gonzalez, who, while serving in the State Assembly, wrote the 2019 bill that in effect made drivers eligible for unemployment insurance and other labor protections. “I would tell no one to give up employment status.”

The opportunity to pass the bill arose because Uber and Lyft were seeking relief from an insurance mandate in California that they said was driving up fare prices. Legislators won widespread support after pairing the union bill with one rolling back the mandate, which requires coverage for accidents when other drivers are at fault, from $1 million per driver to less than half that amount.

“With Sacramento now aligned on the need to make ride share more affordable in California, we’re happy to see these two important pieces of legislation moving forward together,” Uber said in a statement after the Legislature approved the bills.