California Governor Gavin Newsom and state lawmakers have reached an agreement with Uber and Lyft that would allow rideshare drivers to unionize and bargain collectively for improved wages and benefits. The deal includes a collective bargaining bill supported by the Service Employees International Union (SEIU) and another measure, sponsored by Uber and Lyft, that would reduce insurance requirements for accidents involving underinsured drivers. This change is expected to lower costs for passengers.
“Labor and industry sat down together, worked through their differences, and found common ground that will empower hundreds of thousands of drivers while making rideshare more affordable for millions of Californians,” Newsom said in a press release.
The legislative package is seen as a compromise following years of conflict between labor unions and technology companies over driver classification and benefits. In July 2024, the California Supreme Court ruled that ride-hailing services like Uber and Lyft could continue classifying their drivers as independent contractors rather than employees entitled to overtime pay, paid sick leave, or unemployment insurance. This ruling upheld a 2020 voter-approved ballot measure reversing an earlier law from 2019.
If passed, the collective bargaining bill would permit over 800,000 rideshare workers in California to join a union while remaining classified as independent contractors. Under current federal law—the National Labor Relations Act—independent contractors are not granted collective bargaining rights or protections.
David Green, president of SEIU Local 721, described the agreement as the “largest expansion of private sector collective bargaining in California history.”
The proposal has support from Governor Newsom and legislative leaders but must still pass both chambers of the state legislature within two weeks before it can be signed into law.
Some drivers say they have faced issues such as being removed from app platforms without explanation or due process after passenger complaints. Margarita Penazola, a member of the California Gig Workers Union advocacy group, said she lost three days’ income after being deactivated from an app without warning. She believes unionization would help address these concerns: “It means being able to speak up and protect ourselves and our passengers without fear,” Penazola said. “We’re the ones out there every day. We’re the ones that know what’s really happening on the ground, and we should be a part of the decisions that impact our jobs and the people we are trusted to drive safely.”
Driver Mike Robinson reported his weekly pay declined from $700 in 2015 to $500 today before expenses such as gas or maintenance. After being diagnosed with cancer in 2023, he was unable to work because he lacked health insurance coverage: “We need to be able to bargain for fair pay, basic protections and real benefits,” Robinson said.
Should this legislation pass, California would become only the second state where rideshare drivers can unionize; Massachusetts voters approved similar measures last November.
Uber initially opposed this legislation but now supports its advancement alongside Lyft. “We’re encouraged to see these two bills advancing in tandem,” Ramona Prieto, Uber’s head of public policy for California stated in a press release. “Together, they represent a compromise that lowers costs for riders while creating stronger voices for drivers.”
According to Uber and Lyft, fares are higher in California compared with other states due mainly to insurance requirements; nearly one-third of each fare reportedly goes toward state-mandated insurance costs. The new insurance bill proposes reducing coverage requirements for accidents caused by uninsured or under-insured motorists from $1 million per incident down to $60,000 per individual injured ($300,000 per accident).
