In a unanimous decision released on Thursday, the California Supreme Court upheld Proposition 22, the voter initiative that permits companies like Uber and Lyft to classify their drivers as independent contractors instead of employees. The ruling rejected claims from a group of drivers and a major labor union that argued the law was unconstitutional as it interfered with lawmakers' authority over workers' compensation matters.

Proposition 22, which has been in effect throughout the legal process, creates a new classification for gig workers, granting them limited benefits but not the full range of rights afforded to traditional employees. The decision affirms the current operations of ride-hailing and delivery services in California, as Uber, Lyft, DoorDash, and other gig economy companies had warned of potential shutdowns if the law was struck down.

The supporters of Proposition 22, including gig companies such as Instacart, celebrated the court's ruling, emphasizing that the law allows workers to maintain flexibility and control over their schedules. Morgan Fong, General Counsel for Instacart, hailed the decision as a historic victory that preserves access to flexible earning opportunities and important benefits.

Uber spokesperson Zahid Arab expressed satisfaction with the court's decision, stating that it affirms the will of the nearly 10 million Californians who voted in favor of Proposition 22. Uber, Lyft, and other companies in the gig economy have urged for similar laws in other states, meaning that the ruling in California may have broader implications for drivers nationwide.

Critics of Proposition 22, including labor groups, voiced disappointment with the court's decision, highlighting concerns regarding low wages, minimal workplace protections, and exploitative practices experienced by gig workers. They have indicated that although this ruling is a setback, efforts will continue to pursue workplace protections for gig workers through alternative avenues.

The legal challenge to Proposition 22 was initiated by the Service Employees International Union (SEIU) and a group of drivers in January 2021, shortly after the law went into effect. After seeking resolution in lower courts, an Alameda County Superior Court Judge ruled in August 2021 that Proposition 22 was unconstitutional and could not be enforced. However, in March 2023, a state appeals court largely reversed this ruling, upholding the law's provision classifying drivers as independent contractors.

This decision by the California Supreme Court brings an end to a long legal battle surrounding Proposition 22, solidifying the status of drivers as independent contractors in the gig economy. The impact of this ruling extends beyond California, as gig companies aim to replicate similar legislation in other states. Despite the disappointment expressed by labor groups, the fight for improved worker protections for gig workers is far from over, as alternative paths such as unionization and collective bargaining are pursued.