California officials announced a compromise Friday that establishes a legal framework for app-based ride-hailing drivers to form unions and pursue collective bargaining, while easing certain regulatory insurance costs that companies say have driven up fares.
Governor Gavin Newsom, Senate President Pro Tem Mike McGuire and Assembly Speaker Robert Rivas endorsed two companion bills that together create the pathway. Assembly Bill 1340, backed by a statewide service employees union, would grant drivers an organized voice on pay, deactivations and working conditions. Senate Bill 371, advanced with support from the major platforms, addresses state insurance requirements tied to ride-hail operations.
State leaders described the arrangement as a negotiated solution balancing drivers’ demands for greater protections with industry concerns about the cost structure of operating in California. Officials said the bills aim to boost driver representation without immediately changing gig workers’ status as independent contractors.
Company officials and labor advocates issued statements welcoming the paired legislation. A California head of public policy for one of the platforms said aligning legislative changes on both organizing and insurance will help lower consumer fares, a claim the companies have long made when critiquing state insurance mandates as a driver of higher prices and reduced take-home pay for drivers.
“This agreement gives drivers a stronger voice at the table and addresses factors that have pushed up the cost of rides,” a company policy official said, characterizing the bills as complementary measures.
Drivers and union organizers view AB 1340 as a significant shift in labor relations for the gig economy. For years, app-based drivers in California have been classified as independent contractors — a designation affirmed by Prop 22, a 2020 ballot measure supported by ride-hail firms — which limited their access to collective bargaining and many traditional workplace protections.
Gig workers have argued that the contractor classification leaves them vulnerable to unilateral changes in pay algorithms, sudden deactivations and inconsistent benefits. Advocates say the new bill would create formal structures for drivers to negotiate contract terms, seek pay increases and push for procedural safeguards.
“Driving for these platforms is how I support my family,” said a Los Angeles driver and member of a statewide gig workers union. “Many of us feel we cannot speak up because being deactivated means losing our income. This legislation would give drivers protections so they can demand fair treatment without risking their livelihoods.”
The insurance provisions in SB 371 aim to relieve platforms of some state-imposed coverage costs that regulators and companies say are disproportionately expensive. Platform leaders have linked those obligations to higher customer fares and diminished driver earnings; state officials signaled they would back adjustments as part of the overall deal.
Observers say the California agreement could influence policies in other states. In 2024, Massachusetts voters approved a measure allowing ride-hail drivers to unionize and negotiate terms, and advocates expect similar proposals to follow in jurisdictions with large gig workforces.
Lawmakers will next move the paired bills through the legislative process. If approved and signed, the measures would create a novel hybrid of organized representation for workers who remain labeled as independent contractors while responding to long-standing industry and labor tensions.
Reporters and stakeholders say the compromise will be watched closely for its impact on driver earnings, consumer fares and the broader debate over the future of gig work in the United States.
