Three years ago, California voters approved Proposition 22, the “Protect App-Based Drivers and Services Act,” which allowed app-based rideshare and delivery companies to hire drivers as independent contractors if certain conditions were met. This week the California Court of Appeal mostly upheld the Proposition as constitutional.

Proposition 22 went into effect in 2021 and was quickly challenged in California state court by various groups seeking a declaration that it violated California’s Constitution. The trial court ruled that Proposition 22 was invalid in its entirety for several reasons including that the legislation intruded on the legislature’s authority to create worker’s compensation laws, limited the Legislature’s authority to amend the legislation, and because it violated the single subject rule for initiative statutes. The single-subject rule requires voter initiatives such as Proposition 22 to only cover one subject.

Proponents of Proposition 22 and the State of California appealed.

The Court of Appeal held that the Proposition did not intrude on the legislature’s authority pertaining to workers’ compensation or violate the single-subject rule. The Court did hold that the Proposition’s definition of an amendment violated the separation of powers principle in the State Constitution. However, the Court found that the unconstitutional provision could be severed from the rest of the Proposition such that Proposition 22 would still apply to covered entities. Based on the majority’s decision Proposition 22 remains in effect for those who qualify under the law, with the exception of the amendment provision deemed invalid. The law has been in effect pending appeal. The case may be appealed to the California Supreme Court.

If you have questions about Proposition 22, or related issues contact a Jackson Lewis attorney to discuss.