California Grants Landmark Union Rights to Uber and Lyft Drivers in Historic Deal
More than 800,000 ride-hailing drivers in California have gained the right to unionize and collectively bargain for better wages and benefits under a new law signed by Governor Gavin Newsom. The measure marks a significant compromise in the years-long battle between labor unions and tech companies, paving the way for what supporters call the largest expansion of private-sector collective bargaining rights in the state’s history.
This legislation allows drivers for companies like Uber and Lyft to join a union while remaining classified as independent contractors. It requires the gig companies to bargain in good faith. California is now the second state to allow such unionization, following a similar ballot measure passed by Massachusetts voters in November.
The new law was part of a broader agreement between the state, the Service Employees International Union, and the rideshare companies. In exchange, Governor Newsom also signed a measure supported by Uber and Lyft that significantly reduces the companies’ insurance requirements for accidents caused by underinsured drivers.
The insurance change is expected to save companies hundreds of millions of dollars—Lyft’s CEO projected savings of $200 million—which the companies say could lead to lower fares for riders. Uber has stated that nearly one-third of every ride fare in California went toward paying the previous state-mandated insurance.
While hailed as a compromise by industry and some labor leaders, the deal has its critics. Advocacy group Rideshare Drivers United, which represents 20,000 drivers, argues the law lacks the strength to guarantee a fair contract. They specifically wanted a requirement for companies to report pay data to the state, a measure they believe was crucial for ensuring wage transparency and progress.
Many drivers, however, see the right to unionize as a critical step toward gaining dignity and a voice. Supporters hope it will address long-standing issues such as unfair deactivations from the apps and inconsistent pay, giving drivers a powerful new mechanism to improve their working conditions.
