More than 800,000 drivers for ride-hailing companies in California will soon have the right to join a union and bargain collectively after Governor Gavin Newsom signed new legislation on Friday. The law is described by supporters as the largest expansion of private sector collective bargaining rights in California’s history and marks a compromise in the ongoing conflict between labor unions and technology firms.
California becomes the second state to allow Uber and Lyft drivers to unionize as independent contractors. Massachusetts approved similar rights through a ballot referendum in November, while drivers in Illinois and Minnesota are seeking comparable changes.
Governor Newsom announced the signing at an unrelated event at University of California, Berkeley. He stated that the law will give drivers “dignity and a say about their future.”
The measure stems from an agreement reached in September among Newsom, state lawmakers, the Service Employees International Union, and rideshare companies Uber and Lyft. As part of this deal, Newsom is also expected to sign another bill supported by Uber and Lyft that would reduce insurance requirements for accidents involving underinsured drivers.
Lyft CEO David Risher said last month that lower insurance rates could save his company $200 million and may lead to reduced fares for riders.
According to Uber and Lyft, fares in California are typically higher than elsewhere in the United States due to current insurance requirements. Uber has reported that nearly one-third of each fare goes toward state-mandated insurance costs.
Disputes over driver classification have persisted for years. In July last year, the California Supreme Court ruled that app-based ride-hailing services can continue treating their drivers as independent contractors without benefits such as overtime pay or paid sick leave. A 2019 law requiring these benefits was overturned by voters at the ballot box in 2020.
Under the new collective bargaining law, rideshare workers can join a union while remaining classified as independent contractors. Gig companies must also engage in good faith negotiations with unions. The legislation does not extend to delivery app drivers like those working for DoorDash.
The accompanying insurance measure lowers coverage requirements for accidents caused by uninsured or underinsured motorists from $1 million down to $60,000 per individual and $300,000 per accident.
Ramona Prieto, head of public policy for California at Uber, said: “The two measures together represent a compromise that lowers costs for riders while creating stronger voices for drivers —demonstrating how industry, labor, and lawmakers can work together to deliver real solutions.”
Rideshare Drivers United—a Los Angeles-based advocacy group representing 20,000 drivers—criticized the collective bargaining law as insufficient for securing fair contracts. The group had called for mandatory company reporting on driver pay data to state authorities.
Nicole Moore, president of Rideshare Drivers United, said: “Drivers really need the backing of the state to ensure that not only is a wage proposal actually going to help drivers, but that there is progress in drivers’ pay over the years.”
Some drivers expressed hope that unionization would bring more job safety and benefits. Supporters noted ongoing concerns about being removed from ride-hailing apps without clear explanations or access to fair appeals processes when passengers file complaints.
