California lawmakers have signed a deal with Uber and Lyft, which allows app-based drivers to form unions and make riding fees more affordable.
This contract is a victory for gig workers, which has long been categorized as independent contractors, and therefore is not subject to the specific protections employees receive, such as the right to collective bargaining.
Gov. Gavin Newsom, along with Senate Speaker Pro Tem Mike McGuire and Congress Speaker Robert Rivas, announced support for two laws on Friday that will form a pathway for app-based drivers to unionize. Congressional Bill 1340 is sponsored by SEIU California, while Senate Bill 371 is sponsored by Uber and Lyft.
Newsom called it “a historic agreement between workers and businesses that only California can provide.” He said workers' representatives and businesses have “found a common foundation that empowers hundreds of thousands of drivers while making ridesharing more affordable for hundreds of thousands of Californians.”
The agreement creates a model that drivers can organize for increased wages, employment protection and other benefits.
In exchange, California regulators say they support laws that reduce the obligation to cover expensive insurance companies have to pay. Uber and Lyft attribute these claim payments to higher ride fares and reduced driver payments in California.
“Sacramento is now happy to see these two important legislation move forward together in line with the need to make ridesharing more affordable in California,” said Ramona Prieto, California's head of public policy, in a statement.
TechCrunch Events
San Francisco | October 27-29, 2025
The deal comes after Uber, Lyft and other app-based gig companies spent more than $200 million to persuade California voters to pass Prop 22.
Drivers have long criticised systems that allow businesses to have broad control over their pay and deactivation. Supporters of the new contract say it can give drivers a strong voice when they disagree with unfair treatment.
The deal could have ripple effects across other states. In 2024, Massachusetts voters approved a similar initiative that allowed riders to form unions and negotiate wages, benefits and working conditions.
This article was updated in an Uber statement.