Editor's note — September 4, 2026: This article is preserved as a snapshot of the dispute on August 6, 2020. California voters approved Proposition 22 on November 3, 2020, with 58.6% voting yes, and the measure took effect on December 16, 2020. On July 25, 2024, the California Supreme Court held that the driver-classification provision challenged in Castellanos v. State of California did not conflict with the state Constitution's grant of workers' compensation authority to the Legislature; the court did not decide challenges that were not before it. Passage of Proposition 22 did not make every related legal dispute moot. Lyft reported on June 30, 2026, that coordinated litigation concerning earlier classification periods remained active, with a hearing scheduled for September 17, 2026. ([elections.cdn.sos.ca.gov](https://elections.cdn.sos.ca.gov/sov/2020-general/sov/complete-sov.pdf))
The dispute
Uber CEO Dara Khosrowshahi took aim at labor unions and driver advocates during Uber's second-quarter earnings call on August 6, 2020, accusing opponents of Proposition 22 of allowing politics to displace drivers' interests. ([investor.uber.com](https://investor.uber.com/news-events/events-and-presentations/event-details/2020/Uber-Q2-2020-Earnings-Conference-Call/default.aspx))
Proposition 22 was then a proposed California ballot initiative that would classify qualifying app-based transportation and delivery drivers as independent contractors rather than employees while providing a separate set of benefits and protections.
We've got terrific supporters in the community as well who actually care about drivers, versus labor unions and politics. They actually are taking into account the wants and needs of drivers.
Khosrowshahi called the proposal “the best of both worlds,” arguing that drivers valued flexibility while also needing wage, health and social protections. He claimed that the “vast majority” of drivers did not want employee status. The call did not independently establish drivers' preferences. ([s23.q4cdn.com](https://s23.q4cdn.com/407969754/files/doc_events/2020/Aug/06/uber-q2-20-earnings-call-transcript.pdf))
Labor and driver advocates rejected his characterization. Transport Workers Union president John Samuelsen told Business Insider that it was “the height of hypocrisy” for Uber executives to claim they cared about drivers while financing a measure intended to prevent employee classification.
Carlos Ramos, then a driver and organizer for Gig Workers Rising, said: “From my years of organizing with fellow drivers I can unequivocally say that Dara's words do not reflect Uber's actions.”
AB 5 and the lawsuits
California's Assembly Bill 5 took effect on January 1, 2020. It generally treated a person providing paid labor or services as an employee unless the hiring entity could satisfy all three parts of the state's “ABC test,” including showing that the worker performed work outside the usual course of the hiring entity's business. ([docs.cpuc.ca.gov](https://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M339/K545/339545137.PDF))
Uber and Lyft continued to classify their drivers as independent contractors and contested whether AB 5 applied to their businesses. A June 9, 2020, California Public Utilities Commission scoping memo said that, “for now,” transportation-network-company drivers were presumed to be employees for the commission's regulatory work. That was not a final judicial resolution of the classification question. ([docs.cpuc.ca.gov](https://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M339/K545/339545137.PDF))
On May 5, 2020, California's attorney general and the city attorneys of Los Angeles, San Diego and San Francisco sued Uber and Lyft. Their complaint alleged that the companies had misclassified drivers and thereby denied them protections including minimum wage, overtime, paid sick leave and access to unemployment and disability insurance. These were allegations being litigated, not findings established by a final judgment at the time. ([oag.ca.gov](https://www.oag.ca.gov/news/press-releases/attorney-general-becerra-and-city-attorneys-los-angeles-san-diego-and-san?utm_source=openai))
On August 5, 2020, the California Labor Commissioner's Office filed separate lawsuits accusing Uber and Lyft of systemic wage theft through misclassification. The suits sought unpaid wages, reimbursement of business expenses, penalties and orders requiring compliance with employee protections. ([dir.ca.gov](https://www.dir.ca.gov/DIRNews/2020/2020-65.html?utm_source=openai))
The Proposition 22 alternative
Proposition 22 offered a different framework. It would preserve independent-contractor status for qualifying drivers and require companies to provide an earnings floor equal to 120% of the applicable local minimum wage for “engaged time,” excluding time spent waiting for a request. It also provided a health-insurance stipend for drivers meeting specified engaged-time thresholds and initially set vehicle-expense compensation at 30 cents per engaged mile. ([lao.ca.gov](https://lao.ca.gov/BallotAnalysis/Proposition?number=22&year=2020))
Driver groups argued that limiting the guarantees to engaged time understated the hours and expenses involved because drivers would not be compensated under the guarantee while waiting to be matched with passengers or deliveries.
Uber, Lyft, DoorDash, Postmates and Instacart backed the initiative. At the time of the original report, campaign-finance figures cited by Business Insider put the supporting companies' combined contributions above $110 million. Spending continued afterward: official records show that committees supporting Proposition 22 had reported more than $188 million in contributions by October 14, 2020. ([sos.ca.gov](https://www.sos.ca.gov/campaign-lobbying/helpful-resources/measure-contributions/2020-ballot-measure-contribution-totals/proposition-22-changes-employment-classification-rules-app-based-transportation-and-delivery-drivers-initiative-statute))
Both sides claimed to represent drivers. Khosrowshahi said the measure reflected what most drivers wanted, while Ramos said tens of thousands were organizing against it. The article documented those competing claims but did not independently measure driver opinion.
The fight carried high stakes because employee classification can trigger minimum-wage, overtime, expense-reimbursement, payroll-tax and benefit obligations that generally do not apply in the same way to independent contractors. What began as a worker-classification dispute had therefore expanded into litigation, regulatory proceedings and a heavily financed ballot campaign.
Responses