In a pivotal shift for the ride-hailing sector, California Gov. Gavin Newsom signed Assembly Bill 1340 in October 2025, granting more than 800,000 rideshare drivers the right to unionize and collectively bargain while preserving their independent contractor status under Proposition 22. Effective January 1, 2026, the Transportation Network Company Drivers Labor Relations Act marks the second state after Massachusetts to extend such rights, overseen by the Public Employment Relations Board for elections and unfair labor practices.

The law mandates companies like Uber and Lyft to negotiate in good faith on wages, benefits, deactivations, paid leave, and earnings, without altering Prop 22 minimums such as the wage floor or $1 million occupational accident coverage. Unions need 10% driver support to access contact lists and 30% for certification in statewide elections via secure remote voting. Newsom hailed it as empowering workers with ‘voice, choice, dignity, and a say about their future,’ per his X post.

Roots in Decade-Long Gig Wars

The breakthrough stems from AB5 in 2019, which aimed to classify gig workers as employees for benefits like minimum wage and overtime. Uber, Lyft, and DoorDash countered with Prop 22, a $200 million-backed ballot measure voters approved in 2020, exempting app-based drivers as contractors. Courts upheld most of Prop 22 in 2024, but struck its ban on collective bargaining, opening legislative doors, as noted by Los Angeles Times.

SEIU California, representing 750,000 workers, sponsored AB 1340, authored by Assemblymembers Buffy Wicks and Marc Berman. ‘A union is the only pathway for 600,000 rideshare drivers to improve their pay and working conditions under Prop 22,’ said Tia Orr, SEIU California executive director, in a Los Angeles Times statement. The deal traded union rights for reduced insurance costs on underinsured drivers, from $1 million to $60,000 per individual.

Sen. Dave Cortese, Senate Transportation Committee chair, presented the bill, stating, ‘Many drivers take home as little as $9 an hour after expenses. AB 1340 provides a statutory path toward a living wage,’ via his official site.

Driver Voices: Hope and Skepticism

Full-time driver Sangar Khan, waiting at San Francisco International Airport’s rideshare lot, expressed interest: ‘I’m interested in joining a union next year to better my working conditions,’ according to CapRadio. Arnulfo Mejia, a 2017 veteran on both apps, pushes for transparency on pay. Yet Rideshare Drivers United (RDU), with 20,000 members, critiques the law as insufficient, warning it favors SEIU and lacks pay data reporting mandates.

‘Drivers really need the backing of the state to ensure that not only is a wage proposal actually going to help drivers, but that there is progress in drivers’ pay over the years,’ said RDU President Nicole Moore, quoted in ABC News. Volunteer Munderloh called it ‘a missed opportunity,’ per KQED. RDU’s site demands stronger enforcement and Prop 22 transition protections.

Lorena Gonzalez, California labor federation head, viewed it positively despite Prop 22 constraints: ‘When workers are misclassified as independent contractors… they lose out on basic labor protections,’ as reported by The Guardian.

Company Stance and Operational Shifts

Uber’s Ramona Prieto called the package ‘a compromise that lowers costs for riders while creating stronger voices for drivers,’ in a KSBW statement. Lyft’s Shadawn Reddick-Smith previously endorsed Prop 22 as drivers’ preferred structure. Companies supported it amid insurance relief, but Uber and Lyft declined CapRadio interviews on union rights.

The statewide bargaining unit covers all drivers, imposing good-faith duties on transportation network companies (TNCs). Decertification requires 30% petitions. Antitrust hurdles for contractors are sidestepped via state law, unlike Seattle’s failed 2015 ordinance.

Critics like Reason magazine warn it could standardize schedules, eroding gig flexibility, in a November 2025 article. X user Kevin Dalton claimed, ‘800,000 rideshare workers didn’t ask for’ it, eyeing SEIU dues.

National Ripples and Early 2026 Momentum

As the first major private-sector bargaining expansion in decades, it could boost U.S. coverage by 10% combined with Massachusetts, per Governing.com. Robert Reich tweeted solidarity: ‘Gig workers deserve the power and protection of a union,’ linking The New York Times.

Illinois and Minnesota drivers push similar bills; Chicago efforts cite pay losses and safety, per Block Club Chicago. NPR noted in January 2026 it’s active, with drivers gearing up amid Prop 22’s earnings shortfalls not accounting for idle time or expenses.

By late January 2026, no major elections reported, but drivers like Khan anticipate action. The law excludes DoorDash delivery, focusing TNCs. Vensure detailed compliance: TNCs report data, face penalties for violations.

Mechanics of Organizing and Bargaining

Petitions trigger PERB elections; certified unions negotiate sector-wide deals. Labor Relations Update outlined: 10% support unlocks lists, 30% wins representation. No pay below Prop 22, no status change. Proskauer noted fast-track potential favoring large unions like SEIU.

For insiders, watch PERB dockets for first petitions post-January 1. CBS San Francisco quoted drivers hoping for deactivation appeals and leave. LA Times explained post-signing mechanics amid SEIU-court openings.

Challenges loom: RDU fears weak enforcement; companies may litigate scope. Yet the compromise—unions for insurance cuts—sets a template, as San Francisco Chronicle detailed in August 2025.