California Supreme Court upholds classification of delivery drivers as independent contractors

Under a unanimous California Supreme Court decision, drivers that work for companies like Uber and DoorDash are officially considered contractors, not company employees.

On Thursday, The California Supreme Court upheld an earlier appeals court decision that affirmed the legality of Proposition 22 — a bill that delivery apps spent $200 million lobbying for — that passed in Nov. 2020, and changed the legal classification of delivery drivers back from company employees to independent contractors.

“We have no need in this case to decide the applicability of our reasoning in the County of Los Angeles to Proposition 22,” the Supreme Court justices wrote in a unanimous decision. “We reserve these issues until we are presented with an actual challenge to an act of the Legislature providing workers’ compensation to app-based drivers.”

Proposition 22 was a direct response to a 2018 Supreme Court ruling and the subsequent 2019 California Assembly Bill 5, which went into effect on Jan. 1, 2020, and made it harder for companies like Uber and DoorDash to argue that their delivery drivers were independent gig workers. AB5 had stated that drivers would qualify as employees if the company controls how they perform their job or if that job is part of a company’s regular business.

At the time, delivery companies got together to file a lawsuit against the state of California, declaring that the AB 5 was unconstitutional. Delivery companies and other proponents of Prop. 22 argue that classifying drivers as contractors is beneficial to these workers because it allows them the flexibility of setting their own hours and schedule within an “on-demand” work structure.

Critics of this reclassification have argued, however, that legally making drivers contractors rather than employees lets delivery companies off the hook when it comes to paying out benefits of full-time employees, including paid sick days, health insurance benefits, and the ability to unionize.

Since Proposition 22 was approved by California voters in 2020, the legality of the case has bounced around in lower courts. This state Supreme Court decision is likely to be the final say on the matter after more than four years of legal deliberation. The decision was lauded by delivery companies:

"This decision is a huge victory for California Dashers and voters – Prop 22 is here to stay,” Liz Jarvis-Shean, vice president of communications and policy, said in a statement. “Today, we celebrate with the hundreds of thousands of Dashers in California who will maintain access to crucial benefits and protections, and to the unique flexibility that draws them to this kind of work. We are pleased that this law is affirmed and this unnecessary legal process is behind us."

Union advocates, however, did not see this decision as a legal victory.

“Prop 22 has allowed gig companies like Uber, Lyft and DoorDash to deprive us of a living wage, access to workers compensation, paid sick leave and meaningful health care coverage,” Service Employees International Union California executive director Tia Orr said in a statement obtained by Politico. “Today’s ruling only strengthens our demand for the right to join together in a union so that we can begin improving the gig economy for workers and our customers.”

Contact Joanna at [email protected]