Lawmakers in California have reached a landmark agreement with Uber and Lyft, paving the way for app - based ride - hail drivers to form unions while potentially lowering ride fares for consumers. This deal marks a significant victory for gig workers, who have long been categorized as independent contractors and thus excluded from key employee protections—most notably the right to engage in collective bargaining.
On Friday, California Governor Gavin Newsom, joined by Senate President Pro Tem Mike McGuire and Assembly Speaker Robert Rivas, announced their support for two critical bills that create the framework for drivers to unionize. Assembly Bill (AB) 1340 is backed by SEIU California, a major labor organization, while Senate Bill (SB) 371 is sponsored by Uber and Lyft themselves.
Governor Newsom described the agreement as “a historic compromise between workers and businesses that only California could achieve.” He emphasized that labor representatives and the ride - hail companies had “found common ground to empower hundreds of thousands of drivers, all while making rideshare services more affordable for millions of Californians.”
At its core, the deal establishes a new model enabling drivers to organize collectively. This will let them advocate for better pay, stronger job protections, and improved benefits—key priorities for a workforce that has long lacked leverage in these areas. In return, California regulators have committed to supporting legislation that eases costly insurance requirements currently imposed on Uber and Lyft. The companies have repeatedly cited these insurance costs as a major factor behind higher ride fares in the state and lower earnings for drivers.
Ramona Prieto, Uber’s Head of Public Policy for California, expressed optimism about the development in a statement: “With Sacramento now united around the goal of making rideshare more affordable in California, we’re pleased to see these two important pieces of legislation move forward together.”
This agreement comes after years of tension in the gig economy. Back in 2020, Uber, Lyft, and other app - based gig companies spent over $200 million to campaign for Proposition 22, a ballot measure that ultimately classified gig workers as independent contractors. While Prop 22 granted workers some limited benefits, it fell far short of the protections afforded to traditional employees.
Drivers have long spoken out against the system established by Prop 22, arguing that companies retain excessive control over pay rates and driver deactivations. This leaves workers with little ability to negotiate better earnings or improve working conditions. Supporters of the new bills say the unionization path will finally give drivers a stronger voice to push back against unfair treatment.
Margarita Peñalosa, a Los Angeles - based gig driver and member of the California Gig Workers Union, shared her perspective: “Like many immigrants, driving for gig companies is my main source of income. Some drivers are terrified of being deactivated and losing their jobs, so we often feel forced to stay quiet instead of demanding fair treatment. No one should have to risk their livelihood just to ask for respect. AB 1340 will give gig drivers a real voice and the protections we need to be treated with dignity.”
The impact of California’s deal could extend beyond the state’s borders. In 2024, Massachusetts voters approved a similar initiative, allowing ride - hail drivers to form unions and negotiate over pay, benefits, and working conditions. This suggests a growing national trend toward expanding gig worker rights.