PROP 22, Gig-Workers and Workers’ Compensation

In case you missed it, the California Superior Court made a ruling earlier this month in one of the most important cases CAAA has been engaged in for some time- Castellanos v. State of California, better known to the rest of the state as the gig-worker case.

Frank Roesch, an Alameda County Superior Court Judge ruled that California ballot measure Prop 22 is unconstitutional. The measure would have exempted Uber and other app-based ride and delivery services from a state law requiring drivers to be classified as employees eligible for benefits and job protections.

In more legal terms, Judge Roesch struck down the measure on the grounds that it expropriates the California constitution’s guarantee that the legislature has plenary power over workers’ compensation. In other words, the legislature has the power to determine what can and cannot be covered by Workers’ Compensation.

This is an important case for CAAA- the largest body of workers’ compensation attorneys in the state dedicated to protecting the rights of injured workers in California.

Justin Sonnicksen, Esq., Co-Chair of CAAA’s Amicus Committee and partner at Gearheart and Sonnicksen in Pleasant Hill said he is encouraged by the trial court’s recent ruling that this proposition is an unconstitutional attempt to remove from the Legislature the ability to create a system of workers’ compensation by altering the definition of “employee.”

“Our organization supported the passage of AB 5 in 2019 and last year, we actively opposed the efforts of the corporate special interests who spent millions of dollars on a misleading marketing campaign to create a permanent underclass of workers to service their industry,” said Sonnicksen.

“We will continue to follow the Castellanos case during the appellate process, and we may participate as amicus on behalf of the employees at the Court of Appeal and/or Supreme Court level.”

Last November, California voters approved Prop 22 after Uber, Lyft and other ride-share services spent over $200 million in its favor, making it one of the most expensive ballot measures in state history. Prop 22 shielded app-based ride hailing and delivery companies from a labor law that required such services to treat drivers as employees and not independent contractors who don’t have to receive benefits such as paid sick leave or unemployment insurance.

Shortly after the Superior Court ruling, Uber said it planned to appeal- a case that is likely to end up in the California Supreme Court.

CAAA submitted an amicus curiae letter in support of the “Petition for Review” filed by Hector Castellanos et al. earlier this year on January 12, 2021, seeking expedited review and a writ of mandate declaring Proposition 22 invalid and unenforceable.

In the letter, CAAA was concerned with the “attempt to limit the constitutionality created plenary power of the legislature to create a system of workers’ compensation.”

If it would be allowed to stand, it is likely other industries- not just the gig-worker economy- will defy the plenary power and create their own “workers’ compensation systems” that will not provide workers the rights and benefits they are rightfully entitled to.

Immediate past President of CAAA, Joseph V. Capurro explained in the letter that workers’ compensation benefits, including access to a complete system “to provide for the settlement of any dispute” is unique among all employment protections as it is constitutionally mandated. That mandate, along with the grant of plenary power to the Legislature, is fundamental public policy.

“It is clear that the App-Based drivers are not independent contractors who can fairly negotiate arms-length contract of service. Instead, it is an effort to legislatively endorse misclassification of workers, creating a new class of workers- dependent contractors- who must rely on the benevolence of those retaining them to provide promised protections,” said Capurro.

Further, “To allow a single industry to purchase such a system through the ballot initiative process while attempting to limit the Legislature’s unlimited plenary power simply cannot stand constitutional scrutiny and would undermine a core public policy without any governmental purpose.”

In sum, the measure improperly removes the state legislature’s ability to grant workers the right to access the state workers’ compensation program.

Despite the ultimate outcome of the case in the coming months, it is likely that rideshare workers will file cases with the Workers’ Compensation Appeals Board, who in turn will have to determine whether to follow the superior court ruling on the constitutionality of Prop 22- but that would depend on whether the case will make it to the California Court of Appeal and / or the California Supreme Court.

In the meantime, gig workers will be left in the fog, with no real clarity on how, when or if their workers’ compensation claims will be handled or processed. One thing is for sure: these California workers should be afforded all the rights and protections guaranteed to them under the constitution.