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California has opened the door for more than 800,000 rideshare drivers to unionize after Gov. Gavin Newsom signed a measure being hailed as a major step for labor rights.
The legislation grants Uber and Lyft drivers collective bargaining powers while maintaining their status as independent contractors.
Supporters said the law represents the largest expansion of private-sector collective bargaining rights in the state’s history. Massachusetts approved a similar measure last year, and campaigns are under way in Illinois and Minnesota.
Newsom, speaking at the University of California, Berkeley, said the law will give drivers “dignity and a say about their future.”
The deal emerged from negotiations in September involving the governor, lawmakers, the Service Employees International Union, Uber and Lyft.
Compromise balances driver rights and costs
The legislation was paired with a second measure reducing the insurance burden on rideshare companies. Backed by Uber and Lyft, the bill slashes required coverage for accidents caused by uninsured or underinsured motorists from $1 million to $60,000 per individual and $300,000 per accident.
Lyft chief executive David Risher said the change is expected to save his company $200 million and could lower passenger fares. Uber has long argued that nearly one-third of the cost of a ride in California goes to state-mandated insurance.
Uber public policy head Ramona Prieto described the package as proof that “industry, labor, and lawmakers can work together to deliver real solutions.”
Not everyone agrees. Rideshare Drivers United, a Los Angeles-based advocacy group representing 20,000 drivers, criticized the bargaining law for lacking teeth. The group wanted companies to disclose pay data to the state, similar to requirements in New York City.
“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, the group’s president.
Overdue worker protections
Some drivers welcomed the legislation as overdue protection against what they describe as arbitrary deactivations and shrinking earnings. “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,” said Los Angeles driver Ana Barragan. “But now, with the right to organize a strong, democratic union, I feel hope.”
The law does not cover delivery drivers for services such as DoorDash.
Legal battles over gig worker rights have dominated California in recent years. In 2019, the state attempted to require benefits for app-based drivers, but voters overturned the measure in 2020. Last year, the California Supreme Court ruled that Uber and Lyft could continue treating drivers as independent contractors without benefits such as sick pay or unemployment insurance.
