California Judge Enjoins Proposition 22 as Unconstitutional in Classifying App-Based Drivers as Independent Contractors

In November 2020, California voters passed a ballot initiative, Proposition 22, by an overwhelming majority. Proposition 22 exempts certain app-based drivers from the requirements of California’s Assembly Bill 5 (AB 5) by deeming them independent contractors, rather than employees. (AB 5, passed in 2019, codified the California Supreme Court’s adoption of the “ABC Test” for determining whether a worker is an employee or an independent contractor in Dynamex Operations West, Inc. v. Superior Court of Los Angeles. AB 5 also made it difficult to classify many app-based drivers as independent contractors.)

Following the approval of Proposition 22 by California voters in November 2020, the Service Employees International Union (“SEIU”), and four app-based drivers challenged the constitutionality of Proposition 22 in state court. On August 20, 2021, Alameda County Superior Court Judge Frank Roesch ruled that Proposition 22 was unconstitutional and unenforceable under California law for a number of reasons:

1) It Infringes on “Workers Compensation”

Judge Boesch held that Proposition 22 unconstitutionally limited “the power of a future legislature to define app-based drivers as workers subject to 'workers compensation' laws.” Judge Roesch explained that the California Constitution vests in the legislature “plenary power, unlimited by any provision of this Constitution, to create, and enforce a complete system of workers’ compensation” (Cal. Const., art. XIV, Section 4) and that Proposition 22 “infringed” on the Legislature’s “plenary power to create a ‘complete system’ of workers’ compensation.”

2) It Restricts Amendment by the Legislative

Proposition 22 also included a section that required a seven-eighths legislative supermajority to amend the measure, which Judge Roesch determined made it “difficult to the point of near impossibility” to amend the initiative. He then held that this section of Proposition 22 was in direct conflict with California Constitution, which explicitly provided for the Legislature’s power to amend an initiative by a simple majority vote: “The legislature may amend or repeal an initiative statute by another statute that becomes effective only when approved by the electros unless the initiative statute permits amendment or repeal without the electors’ approval.” (Cal. Const., art. II, Section 10, subd. (c)).

3.) It Violates the Single-Subject Rule

In California, initiatives must be limited to a single “subject.” (Cal. Const. art. II., Section 8(d)). Judge Roesch found that Proposition 22 violated the single-subject rule by limiting the Legislature’s ability to engage in collective bargaining with these app-based drivers. He observed: “[A] prohibition on legislation authorizing collective bargaining by app-based drivers does not promote the right to work as an independent contractor, nor does it protect work flexibility, nor does it provide minimum workplace safety and pay standards for those workers.” Further, Proposition 22 “appears only to protect the economic interests of the network companies in having a divided, ununionized workforce, which is not a stated goal of the legislation.”

The app-based rideshare companies who backed Proposition 22 have indicated they will appeal the ruling.

The case is Hector Castellanos, et al. v. State of California, et al., Case Number S266551 (Alameda County Superior Court).