SACRAMENTO, Calif. (AP) — More than 800,000 drivers for ride-hailing companies in California will soon be able to join a union and bargain collectively for better wages and benefits under a measure signed Friday by Gov. Gavin Newsom.
Supporters said the new law will open a path for the largest expansion of private sector collective bargaining rights in the state’s history. The legislation is a significant compromise in the yearslong battle between labor unions and tech companies.
California is the second state where Uber and Lyft drivers can unionize as independent contractors. Massachusetts voters passed a ballot referendum in November allowing unionization, while drivers in Illinois and Minnesota are pushing for similar rights.
Newsom announced the signing at an unrelated news conference at University of California, Berkeley. The new law will give drivers “dignity and a say about their future,” he said.
The new law is part of an agreement made in September between Newsom, state lawmakers and the Service Employees International Union, along with rideshare companies Uber and Lyft. In exchange, Newsom also signed a measure supported by Uber and Lyft to significantly cut the companies’ insurance requirements for accidents caused by underinsured drivers.
Lyft CEO David Risher said in September that the new insurance rates are expected to save the company $200 million and could help reduce fares.
Uber and Lyft fares in California are consistently higher than in other parts of the U.S. because of insurance requirements, the companies say. Uber has said that nearly one-third of every ride fare in the state goes toward paying for state-mandated insurance.
Labor unions and tech companies have fought for years over drivers’ rights. In July of last year, the California Supreme Court ruled that app-based ride-hailing and delivery services like Uber and Lyft can continue treating their drivers as independent contractors not entitled to benefits like overtime pay, paid sick leave and unemployment insurance. A 2019 law mandated that Uber and Lyft provide drivers with benefits, but voters reversed it at the ballot in 2020.
The collective bargaining measure now allows rideshare workers in California to join a union while still being classified as independent contractors and requires gig companies to bargain in good faith. The new law doesn’t apply to drivers for delivery apps like DoorDash.
The insurance measure will reduce the coverage requirement for accidents caused by uninsured or underinsured drivers from $1 million to $60,000 per individual and $300,000 per accident.
The two measures “together represent a compromise that lowers costs for riders while creating stronger voices for drivers —demonstrating how industry, labor, and lawmakers can work together to deliver real solutions,” Ramona Prieto, head of public policy for California at Uber, said in a statement.
Rideshare Drivers United, a Los Angeles-based advocacy group of 20,000 drivers, said the collective bargaining law isn’t strong enough to give workers a fair contract. The group wanted to require the companies to report its data on pay to the state.
New York City drivers’ pay increased after the city started requiring the companies to report how much an average driver earns, the group said.
“Drivers really need the backing of the state to ensure that not only is a wage proposal actually going to help drivers, but that there is progress in drivers’ pay over the years,” said Nicole Moore, president of Rideshare Drivers United.
Other drivers said the legislation will provide more job safety and benefits.
Many who support unionization said they have faced a slew of issues, including being “deactivated” from their apps without an explanation or fair appeals process when a passenger complains.
“Drivers have had no way to fight back against the gig companies taking more and more of the passenger fare, or to challenge unfair deactivations that cost us our livelihoods,” Ana Barragan, a gig driver from Los Angeles, said in a statement. “We’ve worked long hours, faced disrespect, and had no voice, just silence on the other end of the app. But now, with the right to organize a strong, democratic union, I feel hope.”
