Castellanos: Why the Court Upheld Proposition 22’s App-Driver Classification

An injury on a delivery can leave you facing medical bills and time without income. A driver for Uber, Lyft or DoorDash who is hurt on a delivery generally has no workers’ compensation claim if the conditions of Proposition 22 are met. The reason is one sentence in a 2020 ballot measure. Proposition 22 made app-based drivers independent contractors when several conditions are met, and workers’ compensation generally covers employees. Drivers and a union argued that the voters had no power to do that, because the California Constitution gives the Legislature “plenary power, unlimited by any provision of this Constitution,” meaning complete power, over workers’ compensation. A unanimous California Supreme Court rejected that argument in Castellanos v. State of California, 16 Cal.5th 588 (2024). Its reasoning separates the voters’ power to classify drivers from the Legislature’s authority over workers’ compensation.

A statute, then a ballot measure

In 2019, the Legislature passed Assembly Bill 5 to address the misclassification of workers as independent contractors. It codified the “ABC test,” which treats a worker as an independent contractor only if the hiring entity proves three things. A Court of Appeal then barred Uber and Lyft from misclassifying their drivers under that law.

In November 2020, Proposition 22 passed with 58.6 percent of the vote. The key provision, Business and Professions Code section 7451, says an app-based driver is an independent contractor if four conditions are met: the company does not unilaterally set dates, times or minimum hours; does not require the driver to accept a specific request as a condition of keeping access; does not restrict the driver from using other platforms except during what the statute calls “engaged time”; and does not restrict the driver from other lawful work.

Instead of employee status, the measure gave drivers a separate set of benefits. Companies must provide, among other things, “occupational accident insurance to cover medical expenses and lost income resulting from injuries suffered while the app-based driver is online.” It also made itself hard to change. The Legislature may amend it only by a seven-eighths vote of each house, and only if the amendment furthers the measure’s purpose. The measure declares that any statute amending section 7451 does not. The drivers argued this means changing section 7451 would require a public vote, because the Constitution bars the Legislature from amending an initiative statute without voter approval unless the initiative says otherwise. And if any part of section 7451 is held invalid, the entire measure falls.

The trial court struck it down. The Court of Appeal did not.

Drivers and the Service Employees International Union sued in February 2021. The trial court held Proposition 22 invalid, calling section 7451 “an unconstitutional continuing limitation” on the Legislature’s power. A divided Court of Appeal reversed on that point, while invalidating two parts of the amendment rules that could be struck without affecting the rest and were not before the Supreme Court. Justice Streeter disagreed and described the measure as an attempt to amend the Constitution in the guise of statutory change.

The Supreme Court limited its review to one question: whether section 7451 conflicts with article XIV, section 4 of the California Constitution, and so requires that all of Proposition 22 be deemed invalid.

“Unlimited” does not mean exclusive

The drivers leaned on the phrase “unlimited by any provision of this Constitution.” The court looked first to Independent Energy Producers Association v. McPherson, 38 Cal.4th 1020 (2006), which read nearly identical language about the Public Utilities Commission and held that it did not stop the people from using the initiative, the voters’ power to pass laws directly. Following McPherson, the court treated the clause as ambiguous: It cannot exempt workers’ compensation laws from the whole Constitution, and nothing singles out the initiative from other checks on the Legislature, such as the Governor’s veto. Even the drivers, the court noted, did not read the clause to leave the Legislature “entirely free of constitutional checks.” Since the phrase requires interpretation, and nothing specifically shows voters meant it to limit the initiative, the court applied its long-standing policy of liberally construing that power.

The drivers argued that the clause’s words “by appropriate legislation” keep ordinary steps such as passage and the veto in place, so the only check the clause removes is the initiative. The court disagreed. If that was the meaning, the word “appropriate” would add nothing, and the drivers’ definition ignored legislation amending an initiative statute, which must be approved by the voters unless the initiative provides otherwise. The court concluded that the clause is ambiguous and that no textual or historical basis exists to apply it solely to the initiative power.

History pointed the same way. The clause was added in 1918 after constitutional attacks on the state’s compulsory workers’ compensation law. The court said the amendment responded to those challenges and does not show an intent to limit the initiative power. The court also rejected the idea that the constitution sets a coverage floor for particular workers, agreeing with the interveners defending the measure that the Constitution’s declaration of workers’ compensation as “social public policy” “does not impose a substantive requirement that the workers’ compensation system cover any particular group of workers.”

No “first-mover advantage” for the Legislature

In our view, the drivers’ strongest point was that section 7451 contradicts Assembly Bill 5’s classification of app-based drivers as employees, and the court agreed that it does. But since the Legislature’s power is not exclusive, giving the Legislature what the court called “a first-mover advantage” would unduly restrict the initiative. The people, it held, “may alter existing workers’ compensation policy without running afoul of article XIV, section 4.” The next sentence limits that statement: “We express no view on the outer bounds of that authority or whether article XIV, section 4 might place limits on it.”

The court then made a narrower point. It agreed with the Attorney General that section 7451 “does not, by its terms, limit the Legislature’s power to enact workers’ compensation laws,” and later said that this conclusion was enough to resolve the question presented. Section 7451 “says nothing about workers’ compensation.” It classifies drivers, and against existing law that classification makes them ineligible, because eligibility generally depends on employment. The Legislature has extended coverage to some nonemployees before, and the court cited partners, volunteers for nonprofits and sheriff’s reserves as examples.

Questions for legislation extending coverage to app drivers

The court identified three specific questions for a dispute over legislation extending coverage to app drivers.

• Whether a new coverage statute would be an “amendment.” The court had no occasion to decide whether a statute giving app-based drivers workers’ compensation would necessarily amend section 7451 and trigger the voter-approval requirement.
• Whether the seven-eighths rule survives. The Attorney General acknowledged the requirement “may be constitutionally problematic.” The court reserved that question until there is an actual challenge to a statute providing workers’ compensation to app-based drivers.
• Whether the Legislature has already acted. The drivers argued that Assembly Bill 1766 restored coverage through a cross-reference to the ABC test. The court noted that the drivers cited no authority for that theory and said it was not clear a conflict already exists. The court said “that question is not before us, and we express no view on it.”

The court’s ruling went no further. It affirmed only insofar as the Court of Appeal held that section 7451 does not conflict with article XIV, section 4.

What this means for a driver or a platform

These points are our practical reading of Castellanos.

• Section 7451 is conditional. Contractor status applies “as long as several conditions are met.” In our view, a driver who has a serious injury should collect evidence of the company’s actual practices on those four conditions.
• Know who the statute covers. The opinion concerns app-based drivers and network companies. We would not assume it reaches other gig work. Our analyses of Proposition 22’s definitions and of proof of employment for a Via driver show how those questions get litigated.
• Report injuries both ways. If the conditions look unmet, consider a workers’ compensation claim. Also meet the deadlines in the occupational accident policy.
• Platforms should not read this as a permanent answer. The court upheld the classification against this challenge and left open what happens if the Legislature acts.

For help with a coverage dispute, see our California workers’ compensation practice.