Class Actions: The Many-Headed Hydra of App-Based Driver Classification

By Rachel Terp

Introduction

Proposition 22 was a last-ditch effort funded and led by Uber, Lyft, DoorDash, Instacart, Postmates, and other tech companies to buy a loophole in California’s worker protection laws. It worked, at least for now. As of December 16, 2020, most app-based drivers are, arguably, independent contractors under California law.

The lead up to Proposition 22’s approval and enactment could hardly have been more dramatic or high stakes, and the drama continues into 2021. The California Supreme Court’s 2018 Dynamex decision, codified by the state legislature in 2020, left little space for app-based rideshare and delivery companies to credibly justify classifying drivers as independent contractors. California’s courts were on the precipice of enjoining Uber and Lyft to treat drivers as employees. Then, California voters passed Proposition 22, which makes app-based drivers independent contractors under specific circumstances. Within days of the new law taking effect, large employers announced plans to out-source jobs to gig-companies, and the Service Employees International Union (“SEIU”) petitioned the California Supreme Court for a writ challenging Proposition 22’s constitutionality. The Court denied the writ, directing the SEIU to start its claim at the trial court level.