Rideshare drivers could gain right to unionize under landmark bill

SACRAMENTO, Calif. - California lawmakers have unveiled a linked set of bills that could reshape the rideshare industry.

The deal is part of a two-bill package: Assembly Bill 1340, which allows drivers to voluntarily unionize and collectively bargain, and Senate Bill 371, which lowers insurance requirements for rideshare companies to help offset costs.

The first piece of legislation would allow drivers to form a union without being reclassified as employees, meaning they would retain their status as independent contractors, a key point of contention in past labor battles.

Together, the bills are being hailed as the largest expansion of private-sector labor rights in state history and a rare compromise between labor, lawmakers, and the rideshare industry.

"This is a historic agreement between workers and business that only California could deliver," Governor Gavin Newsom said in a statement. "Labor and industry sat down together, worked through their differences, and found common ground that will empower hundreds of thousands of drivers while making rideshare more affordable for millions of Californians."

Drivers say the system is broken 

Many drivers are calling this a long-awaited victory, and a chance at pushing for better wages, working conditions, and protections. 

There are more than 800,000 rideshare drivers in California. Many say earnings have dropped dramatically in recent years, and their work hours have gotten longer to make up for it.

Lyft driver Ravi Sahu, of San Ramon, said he often works 10 to 12 hours a day, but takes home far less than minimum wage, before gas, mileage, and wear-and-tear are even accounted for.

"My online time is almost 10 hours right now, my driving time is only 2 hours, I make only 4 rides, I make only $81," Sahu said. "We have to put our gas, we have to do our mileage, our cars are depreciating fast, so it’s a total loss."

Rideshare driver and union leader Joseph Augusto said that early conversations with fellow drivers show strong interest in joining.

"I would say about 70 percent are willing to join the union," Augusto said. "A small percentage are somewhat indifferent, because you have to realize a lot of drivers are immigrants and don’t speak English."

Augusto said he typically takes home about 40 percent of each fare.

Uber says that, on average, 32 percent of the rider’s fare goes directly to insurance costs, and additional portions cover taxes, regulatory fees, and fees like airport pickups, which it pays, so drivers don’t have to.

The company pointed to legislation like SB371, which it says could help lower those costs, making rides more affordable and potentially increasing driver earnings.

"The number one ask of drivers is that they’re paid fairly, and they’re not being paid fairly," Augusto said. "We look forward to moving forward and building the union."

Anoop Singh, a driver in Bakersfield, said he signed up immediately to express interest in joining, after hearing the news.

"I was telling these guys, the union’s always there for you," Singh said.

When asked how he felt about the agreement, he said: "News is good. Somebody heard your voice."

Industry leaders welcome the compromise

Industry officials are praising the agreement as a balanced solution that benefits riders and drivers alike.

"With Sacramento now aligned on the need to make rideshare more affordable in California, we’re happy to see these two important pieces of legislation moving forward together. SB 371 provides much-needed reform that will lower fares for riders and bring more opportunity for drivers. At the same time, AB 1340 will give drivers the option to organize around pay and benefits without sacrificing the independence they value most. Together, these bills show that collaboration between lawmakers, labor, and industry can deliver practical solutions for the way people live, work, and move today," said Ramona Prieto, Uber’s Head of Public Policy for California.

"This deal is a major victory for both riders and drivers in California," said Nick Johnson, Director of Public Policy at Lyft. "By bringing runaway insurance costs under control, we can help maintain the affordability of rideshare without sacrificing proper protections, allowing people to more easily get to medical appointments, the airport or simply to work every morning. And more rides mean more earnings for drivers to help them achieve their goals. We're proud to support legislation that allows us to better serve and connect Californians across the state."

For labor advocates, the agreement marks a turning point for gig workers who say they have long faced challenges in getting fair treatment.

"Gig workers have been fighting, organizing, and advocating for years, because for too long, the industry’s giants have handed workers a raw deal: you do all the work and take all the risks, while corporations make all the decisions and reap the lion’s share of the rewards. That stops with AB 1340," said Tia Orr, Executive Director of SEIU California, the sponsor of AB 1340.

What's next? 

Both bills are expected to move forward in tandem through the legislature in the coming weeks. Still, AB 1340 won't instantly create a union. Joining would be required, and the organizing and negotiations are expected to take at least a year.