A California appeals court reverses a 2021 lower court ruling that deemed Prop 22 illegal, preserving the independent contractor model of Uber, Lyft, and others
Preetika Rana / Wall Street Journal :
Context & Ripple Effects
Prop 22 emerged after courts had ordered Uber and Lyft to reclassify drivers, though an earlier appeals-court stay of that order kept their California services operating while voters considered the measure. Voters then approved the exemption for Uber, Lyft, DoorDash and other platforms in California's 2020 Prop 22 vote.
The new appeals ruling restores that voter-approved framework after a lower court invalidated it, making the contractor model legally operative again for the companies covered by the measure.
First-order effects
- Uber, Lyft, DoorDash and other covered gig companies can continue classifying California drivers as independent contractors rather than employees.
- The lower court's finding that Prop 22 was illegal is reversed, preserving the legal basis for the companies' California operating model.
Second-order effects
- Driver advocates seeking employee classification lose the lower-court ruling as leverage, while gig platforms avoid an immediate need to redesign California labor arrangements.
- The decision gives the coalition behind Prop 22 a stronger position in further litigation over the measure; the subsequent California Supreme Court ruling ultimately upheld it.
Third-order effects
- California's treatment of app-based work is becoming a durable contest between court-led worker classification and voter-approved sector-specific rules, with Prop 22 favoring the latter for covered platforms.
- If the Prop 22 framework continues to withstand review, gig companies will have a clearer incentive to defend contractor-model carve-outs rather than adopt broad employee reclassification in California.
The trend: Gig platforms are using ballot-approved, industry-specific labor rules to preserve contractor models against employee-classification challenges.