California lawmakers and Governor Gavin Newsom have reached a deal with Uber and Lyft that allows rideshare drivers to unionize and collectively bargain while maintaining their classification as independent contractors. The agreement is structured around two bills: Assembly Bill 1340, which creates a process for drivers to choose bargaining representatives and negotiate with the companies, and Senate Bill 371 backed by Uber and Lyft that drastically reduces their insurance obligations. Supporters, led by SEIU California, hail this as the largest expansion of private-sector collective bargaining rights in the state’s history, while critics argue the compromise grants drivers only partial empowerment.
The agreement follows years of conflict between gig economy companies and labor advocates. In 2019, the Legislature passed AB 5, which sought to reclassify many rideshare drivers as employees. Uber and Lyft responded by bankrolling Proposition 22 in 2020, a ballot measure that exempted them from AB 5 and preserved drivers’ contractor status. Although Prop. 22 barred collective bargaining, subsequent court decisions left a narrow path open for legislation, which lawmakers have now acted upon. AB 1340 offers a state-level framework outside the jurisdiction of the National Labor Relations Board, which under the Trump administration has become increasingly hostile to unions.
While the bills open a path for rideshare drivers to unionize, their limitations are notable. Drivers may petition for union recognition by securing signatures from 10% of their peers, but they do not gain a right to strike, a foundation of union leverage. Companies also do not have to provide transparency on wage data or protections against retaliation. At the same time, Uber and Lyft secured major concessions, reducing per-driver uninsured motorist coverage from $1 million to $60,000, a change expected to save the companies hundreds of millions annually.
The deal’s significance lies in its impact on both worker protections and injury recovery. The expansion of collective bargaining rights for rideshare drivers could lead to improved due process in disputes over deactivations, pay, and working conditions. However, by slashing insurance coverage requirements, the deal introduces new challenges for attorneys representing injured rideshare drivers, a group that continues to operate outside of the traditional workers’ compensation system. The hybrid model created here, with limited bargaining rights and reduced financial protections, will likely shape future litigation strategies and may set precedents affecting other categories of nontraditional workers.
