By Helena Verhuyck, PhD researcher on the Platform Economy at University of Antwerp and visiting researcher at UC Berkeley
This news is produced as a part of the Reshaping Work Fellowship Programme. The opinions and views expressed in this publication are those of the author. They do not purport to reflect the opinions or views of Reshaping Work or organisations that have supported the programme.
On October 3, California Governor Gavin Newsom signed into law AB 1340, a bill that grants ride-hail drivers (such as Uber and Lyft drivers) the right to organize and bargain collectively, despite their independent contractor status. This bill removes longstanding antitrust barriers to collective action by independent contractors in the gig economy, whose agreements have mostly been considered unlawful cartels or price-fixing arrangements under U.S. antitrust laws.
This bill was approved against the backdrop of two major developments in California: AB 5, which introduced a rebuttable presumption of employment unless three conditions (of the so-called ‘ABC test’) are met, and Proposition 22, a ballot initiative funded by gig platforms that in turn exempted app-based drivers from AB 5’s employee-friendly scope. Since the passage of Proposition 22, app-based drivers have been locked into independent contractor status and explicitly barred from collective bargaining. In 2023, however, California’s Supreme Court ruled that the collective bargaining prohibition was unconstitutional — opening the door for AB 1340. This new bill does not alter drivers’ independent contractor status, but it does create a legal framework for collective representation and sectoral bargaining within that independent contractor model. In other words, AB 1340 is a workaround within a workaround: Proposition 22 carved out app-based drivers from AB 5, and AB 1340 now carves out app-based drivers from Proposition 22 and its ban on collective bargaining.
The Public Employment Relations Board (PERB) is tasked with administering the law, overseeing elections of driver organizations, enforcing rights, and reviewing any sectoral agreements reached. The scope of protection includes driver compensation, benefits, the terms and conditions of the work, and deactivations. The law enables sector-wide (rather than company-specific) bargaining, provided that certain representation thresholds are met. Furthermore, the law lays out detailed rules regarding unfair practices, arbitration mechanisms, and quarterly data reporting requirements for transportation gig platforms.
Supporters hail AB 1340 as a historic compromise between labor advocates and gig companies after years of legal battles over platform worker status. Critics, however, point out that it maintains the contested independent contractor classification and excludes large swaths of the gig workforce (for example, the bill only applies to drivers working for transportation companies, excluding other gig workers such as food delivery drivers). Still, it is a major step forward and thereby echoes EU developments such as the European Commission’s guidelines exempting solo self-employed platform workers from antitrust restrictions, enabling them to collectively bargain.
With no federal-level protections for gig workers in the United States, AB 1340 positions California once again as a policy laboratory for balancing labor rights with the legal ambiguities of gig work.