California Governor Gavin Newsom has signed a new bill granting Uber and Lyft drivers the right to unionize, while still being classified as independent contractors. The legislation, known as Assembly Bill 1340, could affect more than 800,000 rideshare drivers across the state, AP News reports.
Under the terms of the bill, rideshare companies will be required to negotiate in “good faith” with a certified driver bargaining organization.
Though this marks a major win for many in California’s gig economy, not every participant will benefit. Delivery drivers for apps like DoorDash won’t gain the same rights to organize collectively. The companion bill, SB 371, also alters insurance requirements for drivers, reducing the mandatory coverage for accidents involving uninsured or underinsured motorists from $1 million down to $60,000 per individual and $300,000 per accident.
Ramona Prieto, Uber’s head of public policy for California, said in a statement shared with AP that 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.”
California isn’t the first state to grant Uber and Lyft drivers the right to unionize. Massachusetts approved a similar measure back in 2024, after also reaching settlement with the companies giving drivers a $32.50 an hour guaranteed wage and some company-sponsored benefits earlier that year. Meanwhile, Minnesota and Illinois are considering bills that would provide comparable collective bargaining powers for rideshare workers.
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Still, some advocates say the new law doesn’t go far enough. Rideshare Drivers United, a Los Angeles–based group representing more than 20,000 drivers, argues that additional protections are needed. Nicole Moore, the group’s president, said that alongside collective bargaining rights, drivers “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.”
The relationship between ridesharing giants like Uber and Lyft and their drivers has long been a controversial one. In October, we saw Lyft agree to a $2.1 million settlement with the Federal Trade Commission (FTC) and the DOJ for misleading drivers about their potential earnings, with the FTC claiming it exaggerated potential earnings for drivers by as much as 30% in advertisements.
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