Union rights granted to Uber and Lyft drivers in California
A new law has been signed in California allowing more than 800,000 Uber and Lyft drivers to join unions and negotiate collectively for improved pay and benefits, as reported by CNN Business.
The bill, approved by Governor Gavin Newsom, has been described as one of the largest expansions of private-sector collective bargaining rights in the state’s history.
Under the new framework, ride-hailing drivers will be allowed to unionize while remaining classified as independent contractors.
Alongside granting union rights, the deal also includes a reduction in mandatory insurance coverage for accidents caused by uninsured or underinsured drivers.
This adjustment is also expected to lower operational costs for ride-hailing companies. Lyft alone anticipates saving about US$200 million, which could translate into lower fares for passengers.
California becomes the second state to adopt this model after Massachusetts, while similar initiatives are being discussed in Illinois and Minnesota.
Key Insurance Adjustments
The new law also reduces the insurance coverage that rideshare companies like Uber and Lyft must provide for accidents caused by uninsured or underinsured drivers.
Under the updated rules:
- Coverage per individual has been reduced from US$1 million to US$60,000.
- Coverage per accident has been reduced from US$1 million to US$300,000.
This change is part of an agreement between the state, labor unions, and rideshare companies to balance driver protections with lower operating costs.
Mixed Response from Driver Groups
Some labor groups have expressed concern that the new law does not include stronger safeguards such as mandatory pay transparency.
Advocacy organizations noted that gig drivers continue to face challenges like sudden app deactivations, unclear pay structures, and limited channels for appeal.
Others view the law as an important first step toward greater job security and fairer representation for rideshare workers, who have long reported sudden app deactivations and limited options to appeal such actions.
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