Labor & Employment Law Daily California app-driver companies may still not be in the clear under Proposition 22
Friday, January 15, 2021

California app-driver companies may still not be in the clear under Proposition 22

By Pamela Wolf, J.D.

There remains the important question of whether the ballot initiative they fueled usurped the authority of the state legislature and state supreme court.

Rideshare companies Uber and Lyft are not yet out of harm’s way for gig-driver misclassification problems under California’s controversial A.B. 5, even given the huge return on investment they reaped from Proposition 22, passed by voters in the November 2020 elections. The ballot initiative measure carves out an exemption for app-based drivers. But on January 12, 2021, a group of drivers and the Service Employees International Union (SEIU) petitioned the California Supreme court for a writ of mandate declaring Proposition 22 invalid and unenforceable.

App-driver carveout. Under A.B. 5, app-based drivers would be classified as “employees” rather than “independent contractors,” meaning that gig companies like Uber, Lyft, and Instacart would have to provide a host of new benefits and protections for the drivers, making it more expensive for the companies to do business in California. But passage of California’s Proposition 22 ended those headaches, so long as the app-based companies can meet the criteria set forth in the statutory initiative.

Overreach renders Proposition 22 unconstitutional. As the petitioners see it, the statutory initiative, although titled the “Protect App-Based Drivers and Services Act,” “actually withdraws minimum employment protections from hundreds of thousands of California workers,” a result that would “be profoundly harmful to many workers, but not necessarily unconstitutional, if the measure had not overreached in several significant ways.” The drafters of Proposition 22 improperly tried to use a statutory initiative to usurp California legislature’s constitutional authority under articles IV and XIV of the California Constitution, as well as the California Supreme Court’s inherent authority to determine what is an “initiative amendment” within the meaning of Article II, Section 10.

Legislature’s power usurped. The California Constitution, in Article XIV, Section 4, grants to the legislature “plenary power, unlimited by any provision of this Constitution” to establish and enforce a complete system of workers’ compensation,” the petition alleges. The courts have held that “this grant of authority ‘unlimited by any provision of this Constitution’ constitutes a pro tanto repeal of conflicting constitutional provisions, one that therefore precludes interference with the Legislature’s authority through use of a statutory initiative like Proposition 22,” according to the petition.

Proposition 22, by purporting to remove app-based drivers from California’s workers’ compensation system and to limit the legislature’s authority to extend workers’ compensation benefits to this group of workers in the future, allegedly conflicts with Article XIV, Section 4. The petition also argues that under the express terms of the statutory initiative itself, the conflict requires that Proposition 22 be invalidated entirely.

Judiciary authority invaded. The petitioners also contend that Proposition 22 invades the judiciary’s authority. Article II, Section 10 prohibits the legislature from amending an initiative statute without voter approval unless the initiative allows such amendment, they argue. The California Supreme Court, as the final arbiter of the Constitution, has the role of determining whether a statute passed by the legislature constitutes an “amendment” of an initiative statute within Section 10’s meaning. Yet, a provision at the end of the Proposition 22 purports to define as “amendments” any statutes concerning two areas of law not otherwise addressed in the measure’s substance, according to the petitioners.

Specifically, “Proposition 22 defines as an ‘amendment’ any statute that authorizes an entity or organization to represent app-based drivers, including a union that could bargain collectively for better wages and benefits, as well as any statute that regulates app-based drivers differently based on their classification status,” the petition states. But there is no substantive provision in Proposition 22 that addresses either of these subjects.

Under California Supreme Court precedent, legislation that addresses these subjects thus would not “amend” Proposition 22 for purposes of the state Constitution. Yet Proposition 22’s drafters claim the right to declare any legislation addressing these subjects as “amendments” that can only be enacted by a seven-eighths supermajority vote. In doing so, the drafters impermissibly usurped the state supreme court’s authority to “say what the law is” by determining what amounts to an “amendment” and have impermissibly invaded the s broad authority to of the legislature to legislate in areas not substantively addressed by the initiative, the petition asserts.

Single-subject rule violated. Proposition 22 also violates the single-subject rule by “burying” these confusing amendment provisions on subjects not substantively addressed in the measure, in language that most voters would not be able to understand, the petitioners contend. Allegedly, Proposition 22 “grossly deceived” voters, who were not told that they were voting to prevent the legislature from granting collective bargaining rights to the drivers, or to preclude the legislature from providing incentives for companies to give app-based drivers more than the minimal wages and benefits given under the statutory initiative. “If allowed to stand, the ploy will be repeated in other initiatives as an effective means to slip potentially unpopular provisions past the voters,” according to the petition.

Time to consider fatal defects. The petitioners argue that these fatal defects in Proposition 22 impact not just app-based drivers and the public they serve, but also the initiative process itself. The California Supreme Court has stated that judicial review of the substantive constitutionality of initiative measures should occur only after the election. Now that the election is over, the petitioners contend that the California Supreme Court should exercise original jurisdiction over the case and hold that Proposition 22 is invalid.

“A statutory initiative cannot limit legislative authority that the Constitution provides is ‘unlimited’ or alter the separation of powers provided by the state Constitution, and no initiative, statutory or constitutional, can deceive voters into limiting the powers of the Legislature or the judiciary,” the petitioners argue.

The case, Castellanos v. State of California, is No. 266551.

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