Uber and Lyft drivers allowed to form a union in California

More than 800,000 ride-hailing drivers in California will soon be able to join a union and collectively bargain for higher wages and better working conditions. They owe this to a new law signed by Governor Gavin Newsom on October 3, according to reports. CNN.

Supporters of the law said the move would pave the way for the largest expansion of collective bargaining rights in the private sector in state history. The new law represents a significant compromise in the decades-long standoff between unions and tech companies.

California has become the second state to allow Uber and Lyft drivers, while remaining independent contractors, to unionize. In Massachusetts, voters approved a similar measure in a referendum in November 2024, and in Illinois and Minnesota, drivers are seeking similar rights.

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Newsom announced the signing of the law at a separate press conference at the University of California, Berkeley, noting that the new law would give drivers "dignity and the ability to decide their own destiny."

The law was part of a September agreement between Newsom, state lawmakers, the Service Employees International Union, and Uber and Lyft. In exchange, the governor signed another law, supported by Uber and Lyft, that significantly reduces insurance requirements for accidents caused by underinsured drivers.

Lyft CEO David Risher said in September that the new insurance rates would save the company about $200 million and possibly lead to lower ride prices.

According to the companies, Uber and Lyft fares in California are consistently higher than in other parts of the US due to high insurance requirements. Uber reported that nearly a third of the cost of each ride in the state goes toward mandatory state insurance.

Unions and tech companies have been battling over driver rights for years. Last July, the California Supreme Court ruled that ride-hailing and delivery services like Uber and Lyft could continue to consider their drivers independent contractors, ineligible for paid overtime, sick leave, and unemployment benefits. A 2019 law required Uber and Lyft to provide these benefits to drivers, but voters overturned it in a 2020 referendum.

A new collective bargaining law now allows gig workers in California to join unions while remaining independent contractors, and requires companies to negotiate in good faith. The law does not apply to delivery drivers like DoorDash.

Under another provision of the agreement, coverage requirements for accidents caused by uninsured or underinsured drivers will be reduced from $1 million to $60,000 per injured person and $300,000 per accident.

"These two laws together represent a compromise that reduces costs for riders while strengthening the voice of drivers," Ramona Prieto, Uber's head of public policy for California, said in a statement. "They're an example of how the industry, unions, and lawmakers can work together to find real solutions."

Rideshare Drivers United, a Los Angeles-based organization representing approximately 20,000 drivers, argued that the new collective bargaining law is not strong enough to guarantee fair contracts for workers. It sought to require companies to provide the government with information on drivers' actual earnings.

The organization notes that after New York authorities required companies to disclose information about drivers' incomes, average wages there increased.

"Drivers really need government support so they can see that the proposed payment system will actually help them and that their income will grow over time," said Rideshare Drivers United President Nicole Moore.

Other drivers believe that the new law will provide them with greater stability and additional guarantees.

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Many union supporters reported facing numerous problems, including "deactivation"—the deactivation of their accounts without explanation and without the opportunity to file a fair appeal in the event of a passenger complaint.

"Drivers had no way to fight the companies' increasing takeover of their fares or challenge the unfair work stoppages that cost us our jobs," concluded Los Angeles driver Ana Barragan. "We worked endlessly, suffered disrespect, and had no voice. But now that we have the right to form a strong, democratic union, I feel hopeful."

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