California Supreme Court Upholds Gig Worker Status as Independent Contractors

In a significant ruling, the California Supreme Court has determined that gig workers can continue to be classified as independent contractors rather than employees, thereby undermining recent labor regulations set by the state legislature. The court upheld the constitutionality of Proposition 22, a 2020 ballot initiative that specifically categorizes gig workers for companies like Uber and Postmates as independent, despite the legislative push for broader employee protections through Assembly Bill 5 (AB 5). The core of the ruling revolved around the legality of using ballot initiatives to modify existing laws, particularly those established by AB 5, which introduced an "ABC" test to define independent contractors. This test stipulates that only workers who operate independently and are not under the control of the hiring entity can be classified as independent contractors. The legislation aimed to ensure gig employers provide minimum wage, unemployment insurance, and other benefits typically afforded to employees. Proposition 22, which was financially backed by major gig companies, effectively exempted app-based drivers from the requirements of AB 5. The court's decision emphasized the power of the electorate to change existing laws, stating that the initiative process allows for alterations to workers' compensation policies without violating constitutional provisions. Supporters of the ruling, including the California Chamber of Progress, argue that it protects the independence and flexibility that gig workers desire. However, critics warn that such classifications could lead to a loss of protections for millions of workers nationwide, raising concerns about the future of labor rights in the gig economy.