Four app-based drivers and the SEIU are challenging Prop. 22, the California ballot initiative passed last year that exempts app-based drivers from state employment law and reclassifies them as independent contractors. They argue the initiative is unconstitutionally broad and impermissibly constrains both the legislature and courts. After the California Supreme Court declined to hear the state constitutional challenge directly, the challengers recently refiled in lower court and now face a longer path forward.
Proposition 22: more than just contractor classification
Prop. 22 was written by Uber and Lyft, who presented it to California voters as a straightforward bargain. Rideshare and delivery platforms would get a special exception from the new state law that classifies their drivers as employees entitled to full protections and benefits. In exchange, the companies would guarantee their drivers minimum earnings and some limited benefits. The measure passed following the most expensive initiative campaign in California history, in which Uber, Lyft, DoorDash, Instacart, and Postmates spent more than $200 million.
Voters and opponents of the measure have claimed the campaign’s focus on flexibility and benefits was misleading. One survey, for example, showed that 40% of supporters voted “yes” to help drivers “earn livable wages,” even though the initiative actually reduces the benefits and protections drivers are entitled to. Beyond campaign communications, though, another misleading aspect of Prop. 22 that has received less attention is the measure’s unusually broad amendment restrictions.
Under Article II of the California Constitution, the legislature cannot amend an initiative unless the initiative specifically allows it. As a result, many initiatives allow amendments but subject them to a higher threshold than the usual majority—frequently two-thirds or even 70%. Initiatives also often specify that the legislature can only pass amendments that further the initiative’s original purpose.
Prop. 22 took both of these restrictions to the extreme. First, it sets the threshold for legislative amendment at seven-eights—a bar even Democrats’ current supermajorities could not now clear. It also prohibits any changes to the contractor classification provisions. Finally, it stipulates that any new state legislation “authoriz[ing] any entity… to represent the interests of app-based drivers” or imposing “unequal regulatory burdens” on app-based platforms versus competitors whose drivers are employees, must be considered an amendment to Prop. 22, and thereby subject to the seven-eighths threshold in the legislature.
In short, even though collective bargaining or classification-based regulation were not addressed in the substantive portions of Prop. 22, it nevertheless hamstrings the legislature’s ability to pass any new laws addressing these broad areas.
Prop. 22’s amendment restrictions underpin two of the three constitutional challenges raised by SEIU and the drivers; the third argues that the core contractor classification provision is itself unconstitutional.
1. Prop. 22 violates the single-subject rule
The first challenge is that Prop. 22 violates the California Constitution’s single-subject rule, which prohibits ballot initiatives “embracing more than one subject.” The challengers argue that the predefined categorical amendment restrictions mentioned earlier are a “a classic example of combining unrelated provisions in a way designed to intentionally deceive voters,” and are not “reasonably germane” to the law’s core purpose: contractor classification.
This challenge could be a tough sell. In general, the California Supreme Court has emphasized that the single-subject rule should be “construed liberally,” and that separate provisions can be combined in a single initiative as long as they are “reasonably germane” to a “general purpose or object” of the statute—even if the individual provisions are not interdependent. In one unsuccessful challenge, an appellate court upheld an initiative that taxed cigarettes and directed the revenue to childhood development programs because both provisions furthered a “common purpose” of improving children’s health. The Court has also held that if an initiative satisfies the single-subject rule, there is no basis for separate claims of “logrolling” or “exploiting the initiative process” by combining provisions that would not separately earn voters’ support.
However, the challengers do cite one promising case where the Court found a single-subject rule violation in an initiative because a buried provision created a “potentially deceptive combination of unrelated provisions,” even though both the provision at issue and the overall initiative were related to regulation of the insurance industry.
While the single-subject challenge is likely an uphill battle, it also has the potential for the broadest relief, since initiatives that violate this rule must be stricken down entirely.
2. Prop. 22 usurps the role of courts and the legislature
The challengers also argue that Prop. 22 overreaches the fundamental constitutional bounds of the ballot initiative process—not because of the variety of subjects captured in this single initiative, but because predefining what categories of new laws actually “amend” the original initiative is fundamentally the role of the courts and legislature, not initiative drafters.
Because Prop. 22’s amendment restrictions are so unusual, there is less direct precedent for this question. Unlike the single-subject challenge, however, a finding that predefining amendments is improper likely would not invalidate the entire law. Instead, the court would probably eliminate those restrictions, allowing the legislature to pass collective bargaining or platform regulation laws through the normal process, but leave Prop. 22’s substantive provisions intact.
3. Prop. 22 infringes on the legislature’s authority over workers’ compensation
Article XIV, Section 4 of California’s Constitution governs labor relations and vests the legislature with “plenary power, unlimited by any provision of this Constitution, to create, and enforce a complete system of workers’ compensation.” Although the initiative process normally gives voters lawmaking power that is coextensive with the legislature’s, the lawsuit argues that this constitutional provision gives the legislature an inherent power to determine which workers are employees protected by this “complete system of workers’ compensation,” and that this power “cannot be limited by a statutory initiative.”
Because of the structure of Prop. 22’s severability clause, the challenge argues that if the court finds the contractor classification clause unconstitutional, it must strike down the entire law. However, it is also possible that rather than invalidating the entire law, the Court could merely hold that Prop. 22 does not preclude the legislature from extending worker’s compensation coverage to app-based drivers, even if they are otherwise classified as independent contractors.
What comes next?
After the Supreme Court declined to exercise original jurisdiction, the challengers have refiled in the Alameda County Superior Court, where they face a longer path forward.
Even a successful challenge might not strike down Prop. 22’s central prong classifying drivers as contractors. Still, restoring the legislature’s ability to pass laws enabling collective bargaining or regulating platforms would undo some of the law’s most misleading and overreaching provisions, if not the most immediately harmful.
The stakes for app-based platforms and drivers in California in this case are clearly high—but the impact will also be broader. Uber is notorious for the aggressive tactics it has used with local regulators and competitors when expanding into new markets. With Prop. 22, they brought this same belligerent approach to a policy battle, spending massively to directly overrule the will of the California legislature. As Uber and its peers now prepare to replicate this bare-knuckled approach in other states and countries, this challenge will be a bellwether for whether courts will provide any backstop.