Rideshare drivers have long griped against the twin giants in the gig industry, Uber and Lyft: unsatisfying wages, an opaque deactivation process, and frustration at their own slice of the pie against the company’s billions in pro!ts.
Now, they’ll be able to air their grievances through an organized labor union — should they sign up to do so.
Earlier this month, Gov. Gavin Newsom signed AB 1340 into law, paving the way for rideshare drivers to unionize and collectively bargain for higher wages, paid leave, health insurance, and more. Lawmakers, representatives from the labor union SEIU, and some driver advocates hailed the bill as a major accomplishment for drivers’ rights.
“Drivers have had no way to !ght 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 released through the SEIU. “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. We !nally can bargain for fair wages, respect, and a better future.”
“This is about fairness,” added Joe Augusto, a full-time rideshare driver in San Francisco. “We spend 10 to 12 hours a day on the road, yet we’re not held to the same standards — or afforded the same protections — as other workers. For years, drivers haven’t had a voice in setting fair pay or protections. This bill !nally gives us the opportunity to form our union and be treated fairly.”
Just a year ago, Uber and Lyft were staunch opponents of the unionization effort, claiming it went against the “spirit” of Proposition 22 — the 2020 ballot measure that classi!ed drivers as independent contractors — and would lead to higher prices and decreased driver availability. But over the summer, the two companies agreed to drop their opposition in exchange for a long-desired concession: a sharp decrease in minimum insurance mandates, which Uber claimed were responsible for nearly 33% of a rider’s fare in California.
In exchange for backing the unionization effort, rideshare companies will no longer have to carry $1 million in uninsured/underinsured motorist insurance, which would kick in when an uninsured or underinsured driver caused an accident involving an Uber or Lyft ride. Instead, rideshare companies now only have to carry $60,000 per individual and $300,000 per accident.
Uber and Lyft argued the $1 million !gure was excessive because it applied only to rideshares and not taxis, buses or personal cars. But Paul Goyette – founder and CEO of Goyette Ruano & Thompson, which handles labor and employment disputes, personal injury cases and more – said the new requirement isn’t nearly enough to cover damages resulting from a typical car accident.
“That’s a big deal,” he said. “Any vehicle out there on the roadway, if they cause an accident, it is quite easy if they injure somebody to cause $300,000 in damage. That number gets huge in a hurry… especially if you have multiple parties that are injured in the accident.”
A long driver debate
The debate over what rideshare companies owe their drivers has roiled California for years.
In September 2019, Newsom signed AB 5, which would have tagged Uber and Lyft drivers as employees, rather than independent contractors — meaning the companies would be required to provide drivers health insurance, time off, retirement plans, and more.
“Assembly Bill 5 is landmark legislation for workers and our economy,” Newsom said in a statement at the time. “It will help reduce worker misclassi!cation—workers being wrongly classi!ed as ‘independent contractors,’ rather than employees, which erodes basic worker protections like the minimum wage, paid sick days and health insurance bene!ts. The hollowing out of our middle-class has been 40 years in the making, and the need to create lasting economic security for our workforce demands action.”
AB 5 worked by installing the “ABC” test set forth in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903, under which a worker would be considered an employee unless their employer satis!ed all of the following requirements:
(A) The worker is free from control and direction of the hiring entity.
(B) The worker does work that is outside the typical business of the hiring entity. (C) The worker regularly performs similar work independent of the company.
The test threatened the core of gig companies’ business model, and, a coalition of companies including Uber, Lyft, DoorDash and Instacart lobbied for Prop. 22, which would carve out an exception for “app-based drivers” and reclassify them as independent contractors. The companies spent a record $200 million on the ballot measure, which passed in 2020 with 59% of the vote.
The companies cited the passage of Prop. 22 as a win for their drivers by allowing them to maintain desired freedom and #exibility in when and how they drove and earned money. But not all drivers were happy.
In February 2021, a group of drivers !led Castellanos v. State of California, a lawsuit seeking to invalidate the new measure by saying it was unconstitutional. In August of that year, a trial court agreed with three of their four arguments, and declared Prop. 22 unenforceable.
In March 2023, however, a California appeals court reversed that decision, rede!ning the drivers as independent contractors once again. The plaintiffs appealed that verdict and the case reached the California Supreme Court, which upheld the legality of Prop. 22 in 2024.
In Goyette’s eyes, rideshare drivers are properly classi!ed as independent contractors,due to the initial business model intended for part-time driving on the side rather than full-time employment. Gig-based driving, he said, “was not designed to support a family of four.”
“The system originated with someone who’s got a few extra hours a week and can go drive people around and make an extra couple hundred bucks,” Goyette said. “Everybody wins with that. But it’s evolved into more than that, because there’s plenty of drivers who do nothing but that. It’s a different animal now.”
The road ahead
Even union leaders acknowledge there’s an arduous road ahead before drivers will secure increased pay and bene!ts.
To of!cially unionize, 10 percent of California’s 800,000 rideshare drivers must sign cards in favor of the collective. From there, they’ll have to organize loosely connected drivers across the state, and rally the group to push the multi-billion dollar companies for a contract.
There’s precedent for rideshare driver unions. Last year, Massachusetts became the !rst state to allow such drivers to unionize, after state voters authorized the measure in November with 54% of the vote. Nearly a year later, the App Drivers Union is still working to gather enough union cards to ratify the union.
California drivers may be in for a similar slog in the near future.
“It’s going to be hard,” said Goyette. “Drivers in rural areas are going to have a totally different feeling about this than drivers in urban areas. Part-time drivers are going to have a different feeling about this than full-time drivers.”
An Uber spokesperson did not answer a request for comment as to whether the company would commit to bargaining in good faith should the drivers union take shape. Goyette believes drivers will eventually secure higher wages and bene!ts, should they unionize. But if that happens, he stressed that the costs will likely be passed onto the consumers.
“I don’t think they thought about the consumer a whole lot, in this deal,” he said. “It’s like a lot of things — the consumer, the taxpayer, or whoever pays the bill at the end of the day is an afterthought. I think it’s certainly a hit for the consumer — they could certainly pay higher rates, and there’s a liability trade-off, too, with a reduction in their insurance requirements. I’m sure the rideshare companies must feel like they’re going to save signi!cantly.”
Meanwhile, some drivers and their advocates feel the compromise doesn’t go nearly far enough — giving Uber and Lyft concrete !nancial concessions in the form of reduced insurance requirements, while giving drivers only the promise of a future union, without immediate guarantees of better pay or bene!ts.
“The bill as agreed to has none of the strengthening language, and will force drivers to negotiate from a pay #oor far below minimum wage, lacks substantial protections for drivers who engage in taking action such as striking, and has no adequate measures to hold companies accountable if they ignore or violate the established rules,” Rideshare Drivers United, a California-based, driver-led organization with over 20,000 members, said in a statement.
There’s also language in the bill that will favor the SEIU, which sponsored AB 1340, and other legacy unions over other upstart organizations that may hope to compete for representation. The bill states that an eligible “transportation network company driver organization” must have at least !ve years of advocacy for rideshare drivers in California, as well as prior experience negotiating collective bargaining agreements and representing workers under those agreements.
An SEIU spokesperson told POLITICO the clause was designed to “ensure fake or corporate-sponsored unions are excluded, and that any organization which is representing these workers has the ability and expertise necessary” to represent drivers.
In Goyette’s eyes, the language makes it easier for them to secure membership dues from as many as 800,000 rideshare drivers across the state.
“If you’re a legacy union like SEIU, that’s exactly what you want,” he said. “What you don’t want is some new union starting — Rideshare Drivers United — that springs up as a member-run association and not an international union with deep-seated political ties. SEIU wasn’t granted an exclusive on union ridership, and I’m sure a lot of the big AFL-CIO unions will compete for this. The last thing they want is a competitor to come up and take away from the membership score.”
In the meantime, Uber and Lyft say the reduced insurance requirements will lead to lower fares for riders across the state. It’s likely that many riders will appreciate the decreased cost and overlook the adjustments in liability when booking a ride — as Goyette noted, “do people ever think about the rate of insurance someone has when they go on a ride across town?”
But should the companies cite increased labor costs as a reason to raise fares in the future, it could lead to unintended consequences for all parties involved.
”Conceivably, worst-case scenario for the industry is people saying, these rates are too high, they don’t carry enough coverage, I’m not even messing with it. I’m going to !gure out an alternative,” Goyette said. “But probably not. It’s so convenient, and so ingrained at this point, that people will probably continue to use it. But there is a limit to what people will pay.”
And with the advent of transportation options that don’t require a human driver at all, Goyette said those limits could become more concrete.
“If the net effects of the next 10 years is a severe decline in rideshare companies, with a signi!cant increase in driverless vehicle companies, that’d be something the unions and politicians didn’t anticipate,” he said. “I’ve taken Waymos, and they’re fantastic, and very economical. Certainly, it opens the door for them to compete.”
Photo: Uber and Lyft decals on a car on April 28, 2023 in New York City. (Photo by Michael M. Santiago/Getty Images)
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