SACRAMENTO, California — In roughly six weeks, three California Democrats, a labor head and two ride-hailing leaders managed to pull off what would have been unthinkable just one year prior: striking a deal between labor unions and their longtime foes, tech giants Uber and Lyft.
California lawmakers announced the agreement in late August, paving a path for ride-hailing drivers to unionize as labor wanted, in exchange for the state drastically reducing expensive insurance coverage mandates protested by the companies. It earned rare public support from Gov. Gavin Newsom and received final approval from state lawmakers this week.
The swift speed of the negotiating underscores what was at risk: the prospect of yet another nine-figure ballot measure campaign or lengthy court battle between two deeply entrenched sides, according to interviews with five people involved in the talks.
Their accounts shed new light on how the deal came together: how the talks started, who was in the room, and the lengths they went to in order to turn around such a quick proposal — from taking video meetings while recovering from surgery to the unexpected aid of one lawmaker’s newborn baby.
“This was really quite fast,” said Ramona Prieto, Uber’s chief policy expert in Sacramento. “It wasn't like this was months of negotiating.”
The landmark proposal is only the second time a state has reached such a framework for Uber and Lyft drivers, after Massachusetts did so in 2024.
And unlike Massachusetts, it came together without reverting to a ballot fight. California already saw its most expensive ballot measure effort to date in 2020, when Uber and Lyft spent more than $200 million backing an initiative to bar app-based workers from being classified as traditional employees, known as Proposition 22.
Its passage sparked a legal challenge from labor leaders that wasn’t resolved until July 2024, when California’s Supreme Court affirmed the ballot measure’s constitutionality.
“Of course, everyone wants to avoid a protracted legal battle with well-resourced opponents,” said Tia Orr, SEIU’s executive director and among the state’s most influential labor leaders. “Years spent in court are years workers are waiting for their rights.”
But the compromise still faces hurdles ahead. A recent lawsuit has raised fresh scrutiny of how the deal came together and what truly motivated it. Further criticism from those left out of the negotiating room is putting dealmakers on the defense as they try to sell it more widely. Plus, the final deal isn’t what some labor leaders hoped when they first set out to strengthen drivers’ rights in 2019.
“We’re so constrained by Prop 22,” said California Labor Federation President Lorena Gonzalez, who authored the 2019 law aimed at granting app-based drivers union rights that Prop 22 negated. “It's not what I had imagined for union participation and employee status.”
And while the deal allows gig workers to unionize, that doesn’t guarantee the necessary 10 percent of the state’s 800,000 ride-hailing drivers actually will. Many who drive for Uber and Lyft do so part-time, and labor leaders acknowledge the challenge of organizing a disparate population that doesn’t have a space to meet one another.
“That’s going to be hard,” Orr said.
Converging fortunes
Official talks on the deal didn’t kick off until July, but months before that, the different sides were contemplating how to get what they ultimately wanted: bargaining rights for labor, reduced insurance mandates for Uber and Lyft.
In late March, Uber and Lyft introduced a bill with first-term state Sen. Christopher Cabaldon, a Democrat, to significantly reduce the companies’ $1 million minimum insurance liability requirement for crashes caused by underinsured drivers. The companies, citing their own research, argued California’s decade-old mandate far exceeded similar rules in other states and was eating into drivers’ incomes. Uber estimated the requirement was responsible for hiking ride-hailing fares by 32 percent across California and as much as 45 percent in Los Angeles County.
Meanwhile, Democratic Assemblymembers Buffy Wicks and Marc Berman introduced a bargaining plan for gig workers alongside SEIU in early April as a response to the state Supreme Court’s ruling on Prop 22. That ruling held that app-based drivers were unable to collectively bargain for benefits like pay increases and health insurance as independent contractors, but it left the door open for lawmakers to create a special framework for gig workers.
The two proposals for driver unions and insurance discounts began as separate efforts. But their fortunes slowly intertwined over time as Uber and Lyft built their opposition to the drivers’ union measure, and as labor unions moved to fight the companies’ insurance effort.
“As these things were converging, there was a … realization of, ‘this could be the thing,’ that we tie these things together,” Wicks said. “[We were] looking at: What do all sides want? How do we land on something where no one’s winning everything, but everyone’s winning something?”
Uber and Lyft lobbyists argued during spring committee hearings that SEIU’s unionization plan flouted Prop 22, raising the possibility of another messy court fight if California approved an organizing framework without Uber and Lyft’s buy-in.
Then, in mid-July, a handful of labor-aligned progressives warned the companies during back-to-back Assembly committee hearings that their quest for cheaper insurance risked collapse without more explicit guarantees to reinvest additional savings into worker benefits.
“If you can find a way to build that into the statute,” Democratic Assemblymember Chris Rogers said during a July 16 Assembly Communications Committee hearing, “I think you'll get a lot more support.”
Berman and Wicks had already signaled they were willing to negotiate with Uber and Lyft on driver unions. Cabaldon, meanwhile, said the Assembly committee hearings crystallized the connection between affordability and driver benefits.
And with California’s final appropriations hearing that would decide the fate of hundreds of contentious bills fast approaching at the end of August, SEIU, Uber and Lyft had added incentive to strike a deal that would sidestep any wars of attrition. Wicks chaired the Assembly’s appropriations panel, and Cabaldon sat on its counterpart committee in the Senate.
“One of the reasons why fares have been going up is that fewer and fewer people want to drive. And so you couldn’t fully protect riders unless you really paid attention to compensation and other issues for the drivers,” Cabaldon said. “That’s really when it got joined.”
‘A hospital-based deal’
Getting both sides on the same page happened quickly, starting in July and going through August, but required substantial haggling, as there was little precedent for dealmakers to draw from. Massachusetts was the only other state that had approved a similar bargaining framework for Uber and Lyft drivers, but it came via a voter-approved ballot measure and not through traditional legislation.
On top of that, the concept for organizing drivers was sectoral bargaining, where workers across an entire industry bargain as one unit, rather than with individual employers. The concept is still relatively new to California and controversial among labor advocates.
SEIU and other labor groups have wielded a sector-by-sector approach to secure minimum wage hikes for California health care and fast food workers in recent years, but some have criticized the approach for not moving fast enough to secure further worker benefits.
“Labor has been so divided upon this,” said John Logan, a labor history professor at San Francisco State University. ”There are people within the labor community who say, ‘No, we should not settle for anything other than full employee status for gig workers.’”
The question of where to draw the compromise line on gig workers’ ability to organize created tension at times. But those at the negotiating table — Wicks, Berman, Cabaldon, Orr, Prieto and Lyft’s Nick Johnson — credited strong preexisting relationships for keeping conversations on track.
Wicks had past experience pulling legislative deals together with tech companies, like she did with Google on journalism funding last year. Cabaldon, the newcomer, was a pragmatist versed in the intricacies of sectoral bargaining from his two-decade stint as West Sacramento mayor.
And when tempers flared, negotiators said Berman's sense of humor grounded them — as did his newborn baby, who made cameos on Zoom calls.
“Berman had a unique strategy. When things got even remotely tense, he showed us his cute baby,” Orr said. “That was able to calm us down and keep us on track.”
In fact, many of the talks happened over video calls from home or otherwise, reflecting the urgency those involved felt. Cabaldon even joined calls while recovering from emergency eye surgery.
“This was a hospital-based deal,” Cabaldon joked. “I suggested to [Berman] — and he did not take my suggestion — that he name the baby ‘sectoral.’”
Negotiators said Assembly Speaker Robert Rivas and Senate Pro Tem Mike McGuire were kept informed of negotiations but had little direct involvement until it was time to announce the agreement in late August. Staff from Newsom’s office were also kept in the loop and provided guidance on the specifics of how to set up a sectoral bargaining framework for ride-hailing drivers at state labor agencies.
Their final agreement, backed by Rivas and McGuire, made tweaks to both bills but kept intact each measure’s overarching goal. Ride-hailing drivers can start gathering support for a union in early 2026, while Uber and Lyft will see their $1 million liability for crashes caused by underinsured drivers fall to $300,000 per incident.
Newsom hailed the deal as “historic” upon its release. But that didn’t ward off critics.
Lawsuits and fine print
Within days, the landmark agreement came under fire in a bombshell lawsuit claiming it was part of an alleged scheme to benefit Rivas and his politically influential brother, Rick Rivas.
The lawsuit from the speaker’s former staffer, Cynthia Moreno, claims without providing corroborative evidence that the Rivas brothers orchestrated the agreement on app-based driver unions to secure SEIU’s support for the Proposition 50 redistricting ballot measure. Newsom and allies have been heavily pushing the measure to counter Donald Trump-backed efforts to redraw maps in red states.
Rivas representative Elizabeth Ashford dismissed the lawsuit as “meritless.” SEIU, Uber and Lyft all vehemently denied any connection between Prop 50 and the ride-hailing deal, as did the three lawmakers involved in negotiations.
“Never have those two things [redistricting and driver unions] been discussed in the same sentence, in the same meeting, in the same thought in my head,” said Berman.
“Full stop, there’s just no truth to it,” Orr said specifically of the lawsuit’s claims about the ride-hailing deal.
Still, the denials haven’t quelled questions about why the agreement was negotiated behind closed doors. Republican Assemblymember Carl DeMaio, a longtime critic of labor unions, called the deal a “pretty good example” of organized labor’s influence in Sacramento.
“We're not going to see workers, drivers, get better benefits,” DeMaio said from the Assembly floor on Sept. 9. “We will see union coffers swell.”
It’s not just Republicans questioning the deal. Veena Dubal, a law professor at the University of California, Irvine, who specializes in gig economy research, argued the compromise framework creates a “union-in-name-only” that limits what workers can negotiate while giving Uber and Lyft an insurance discount that puts other drivers’ safety at risk.
Under the deal, a drivers’ union would be entitled to negotiate paid leave, compensation, drivers’ deactivations from Uber or Lyft platforms, and other benefits like health insurance. But some topics are off-limits, including fare pricing, app design features, algorithms and other software tools core to Uber and Lyft’s operations.
Dubal told POLITICO there are “a number of unions” not directly involved in negotiations that “are very upset” about the deal, like the Los Angeles-based Rideshare Drivers United. (RDU didn’t reply to a request for comment.)
“I don't think that workers are going to get a lot from this,” Dubal said in an interview. “And I think that in the long run, what it does is undermine [and] really cut off the possibility of a strong, representative organization that fights for drivers’ interests in California.”
Both Dubal and Logan, the San Francisco State professor, further argued the deal is written to favor SEIU. They cited provisions in Wicks’ measure that require any union group representing drivers to have at least five years of advocacy experience, as well as prior experience in negotiating collective bargaining agreements.
“There are other labor groups that have been trying to organize gig workers, and they will likely be excluded,” Logan said.
In a statement, SEIU spokesperson Maya Polon told POLITICO the provisions “are meant to ensure fake or corporate-sponsored unions are excluded, and that any organization which is representing these workers has the ability and expertise necessary” to represent drivers.
Wicks, speaking from the Assembly floor on Sept. 9, rejected accusations of political favoritism. She pitched herself as an “independently minded” lawmaker who “calls balls and strikes.”
“I'm not a shield for anyone,” Wicks said. “This is business and labor coming together to solve a problem.”
And David Madland, a proponent for sectoral bargaining and senior fellow at the nonpartisan Center for American Progress, called it a “really good” agreement when considering Prop 22 greatly constrained bargaining options for app-based drivers.
“This is a good way of providing an opportunity for these kinds of workers to get benefits that they wouldn't otherwise be able to get,” Madland said. “I think it's a really great experiment that other states should be adopting.”
Even Gonzalez, the Labor Fed President and longtime proponent for making drivers full employee status rather than independent contractors, offered measured praise for the agreement.
“Anytime that we provide more empowerment to workers to voice their opinion at a table, to get at a table with a boss, I think that’s a win,” she said.
In Massachusetts, drivers are still gathering signatures to meet the unionization threshold. The state’s framework has drawn criticism from Teamsters President Sean O’Brien, who argued the state’s sectoral bargaining model for independent contractors supports “greedy corporations that want to deny full employment rights to workers.”
Orr acknowledged California’s unorthodox agreement makes unionization tricky. Come May 2026, union leaders have to rally at least 10 percent of the approximately 800,000 ride-hailing drivers in the state to sign union cards. And from there, labor leaders need an even larger share of drivers to support a union election before they can bargain with Uber and Lyft.
“They don’t have a break room or a lunch room. We have to find non-traditional ways to get to them,” Orr said.
But she added: “We’re ready.”
Chase DiFeliciantonio contributed to this report.
from Politics, Policy, Political News Top Stories https://ift.tt/SKnzvck
https://ift.tt/N7tSIbo
0 Comments