Sacramento –

On Friday, Governor Gavin Newsom alongside California lawmakers unveiled a bill concerning Uber and Lyft that would allow countless ride-sharing drivers to negotiate collectively as they seek to form unions while still being classified as independent contractors.

Newsom, Assembly Speaker Robert Rivas, and Senate Pro Tem Mike McGuire expressed their backing for a compromise that advances collective bargaining legislation and related proposals, significantly easing insurance requirements for the companies.

Companies have previously pushed back against insurance costs due to current high requirements, asserting that these have led to elevated passenger fees.

“Labor and industry have come together, bridged their differences, and identified a common ground,” Newsom remarked. He emphasized that the agreement “makes ridesharing more affordable for millions of Californians while empowering hundreds of thousands of drivers.”

This contract marks a notable shift in a long-standing dispute between organized labor and Silicon Valley enterprises over California’s treatment of independent contractors.

The two bills “embody a compromise that reduces costs for riders while providing a stronger platform for drivers,” stated Ramona Prieto, Uber’s California public policy director, in a prepared statement.

Following the California Legislature’s alteration of employment law in 2019, which clarified and restricted how workers could be classified as independent contractors, Uber and Lyft sought to exempt drivers from this law through a voter initiative. This measure, known as Proposal 22, was approved by nearly six out of ten voters in 2020.

This year, lawmakers made another attempt, with Congress members Buffy Wicks (D-Oakland) and Marc Berman (D-Menlo Park) introducing a collective bargaining bill backed by the United Service Workers West.

Originally opposed by Uber and Lyft, this bill would enable drivers to negotiate wages and other contract terms, while exempting them from state and federal antitrust laws that typically forbid collective action by independent contractors.

The insurance bill, which has gained support from Uber and Lyft and was introduced by State Senator Christopher Cabaldon (D-Yolo), aims to lessen the amount of insurance required for companies providing rides.

At present, businesses must maintain $1 million in coverage per ride-sharing driver for accidents involving uninsured or underinsured drivers. The new contract proposes to require only $60,000 for uninsured driver coverage per ride-share driver, and $300,000 per accident.

Cabaldon mentioned that this adjustment would remove “excessive insurance requirements that don’t apply to other transportation forms, like taxis, buses, and limousines.”