SACRAMENTO, California — Gov. Gavin Newsom on Friday signed a landmark agreement that creates a pathway to unionization for Uber and Lyft drivers.
Now comes the hard part: actually forming a union.
California is just the second U.S. state, behind Massachusetts, where Uber and Lyft drivers can organize industry-wide to pursue better pay and benefits like health insurance. The California deal, however, was reached in August through negotiations involving Sacramento Democrats, labor leaders from SEIU, as well as Uber and Lyft representatives, instead of resorting to an expensive ballot measure campaign like the Bay State.
As part of the agreement, Newsom is also expected to sign a second bill on Friday, which will drastically reduce insurance coverage requirements for the ride-hailing companies.
Newsom said at a press conference that the unionization deal will offer ride-hailing drivers a “voice, to give them choice, give them dignity and a say about their future.”
“I say that because it needs to be said: I’m not naive about how people are feeling about their future,” he added.
AB 1340, authored by state Assemblymembers Buffy Wicks and Marc Berman, and sponsored by SEIU California, outlines bargaining terms for California’s app-based drivers to seek increased pay and employee benefits like health insurance.
SEIU California Executive Director Tia Orr painted the agreement as a sharp contrast to President Donald Trump’s recent threats to fire federal workers en masse amid a government shutdown in Washington.
“Trump is gutting workers’ fundamental right to come together and demand fair pay and treatment,” Orr said. “But here in California, we are sending a different message: when workers are empowered and valued, everyone wins. Shared prosperity starts with unions for all workers.”
The second bill Newsom is set to approve, SB 371 from state Sen. Christopher Cabaldon, slashes the amount of insurance coverage Uber and Lyft must carry for crashes caused by underinsured drivers from $1 million to $300,000 per incident.
Uber estimates insurance fees constitute 32 percent of the average fare for rides in California, higher than in nearly all other U.S. states. That number rises to 45 percent in Los Angeles County.
“AB 1340 and SB 371 together represent a compromise that lowers costs for riders while creating stronger voices for drivers,” Ramona Prieto, Uber’s California policy head, said in a statement.
The insurance relief would kick in beginning next year for Uber and Lyft. But labor leaders have plenty of hoops to jump through before drivers can begin bargaining.
Drivers can’t apply for union recognition until May 2026 at the earliest. To do so, labor leaders must rally at least 10 percent of the approximately 800,000 ride-hailing drivers across California to sign union cards. And an even larger share of drivers, 30 percent, must vote to approve a proposed driver union before its leaders begin bargaining with Uber and Lyft.
Even if drivers elect a union, their negotiating power is constrained by Proposition 22, a 2020 state ballot measure that barred app-based workers from being classified as traditional employees. Uber and Lyft spent more than $200 million to pass the measure.
