After a decade of fighting, California legislators and the companies Uber and Lyft reached an agreement that will allow the unionization of approximately 800,000 drivers classified as contingent workers.
The agreement was ratified when Governor Gavin Newsom signed into law AB 1340 drafted by Assemblymembers Buffy Wicks (D-Oakland) and Marc Berman (D-Menlo Park) and validated the efforts of thousands of workers.
“This is a historic agreement between labor and business that only California could achieve. Labor and industry came together, resolved their differences, and found common ground that will empower hundreds of thousands of drivers, while making ridesharing more affordable for millions of Californians,” Newsom said.
“It is proof that California can achieve great things, address complex problems and improve people’s lives,” he added.
The signing of the Transportation Network Company Drivers (TNC) Labor Relations Act came at a time when President Donald Trump’s administration is trying to dismantle unions.
In California the opposite has happened. The strength of the Service Employees International Union Local 721 and the unity of workers allowed what for many was impossible: winning the right to unionize for 800,000 individuals.
“I remind people daily that resistance against the Trump administration is not just taking to the streets, but joining the unions,” said Martín Manteca, director of the California Enforcement Drivers Union.
“It is a resistance, because in the Trump government, the oligarchs and billionaires are trying to destroy the only place where the American worker can advocate for their rights, which are the unions,” he said.
“Therefore, this victory means that Trump is not winning,” he added. “Yeah [Trump] It took away the right to have a union for half a million federal workers, we gained the right for 800,000. And it’s just the beginning. “The people have spoken and won.”
California is the second state where Uber and Lyft drivers can unionize as independent contractors. Massachusetts voters approved a referendum in November allowing unionization, while drivers in Illinois and Minnesota are pushing for similar rights.
The new law will give drivers “dignity and the ability to have a say in their future,” the governor said.
“The battles are going to multiply in different states of the country, so that drivers can defend their employment contracts for themselves,” reported Martin Manteca.
In May 2026, the process to legally request the formation of the drivers’ union at Uber and Lyft will begin, who, in Southern California, represent 75% of all trips in California.
Once the signatures are ratified (10% of the total drivers), the labor authorities would proceed to ratify the union.
The above would mean that workers sit at the negotiating table with employers to achieve better wages, health benefits and labor rights for thousands.
Insurance coverage costs and travel prices will drop
Tied to AB 1340, backed by Uber and Lyft, the signing of SB 371 by Senator Christopher Cabaldon, (D/Santa Rosa) will reduce the costs of ride-sharing services by reducing the insurance requirement that requires drivers to cover $1 million for accidents caused by other uninsured or underinsured drivers. The settlement reduces that amount to $60,000 in uninsured motorist coverage per person and $300,000 per accident.
“This agreement is a huge win for both riders and drivers in California,” Nick Johnson, Lyft’s director of public policy, said in a statement.
“By reining in runaway insurance costs, we can help maintain the affordability of ridesharing without sacrificing proper protections, allowing people to more easily get to their medical appointments, the airport, or simply to work each morning,” he added.
“In addition, more trips translate into higher income for drivers, which helps them achieve their goals,” he said.
In February of this year, Lyft CEO David Risher reported revenue of $1.6 billion, a 27% increase over the previous year and $10 million more than expected.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) nearly doubled and Lyft hit $112.8 billion, beating estimates of $104.4 million.
They foresee millionaire profits from Uber
Ramona Prieto, Uber’s public policy director for California, stated that Uber also supported the signing of AB 1340 and SB 371.
“Sacramento has united around the need to make ridesharing more affordable in California, and we are encouraged to see these two bills moving forward together,” Prieto stated.
“SB 371 provides much-needed reform that will reduce fares for passengers and provide more opportunities for drivers,” Prieto added. “At the same time, AB 1340 will give drivers the option to organize around wages and benefits without sacrificing the independence they value most.”
Meanwhile, Nasdaq analysts predict by 2025 that Uber’s revenue and adjusted EBITDA will grow 17% and 34%, respectively. Uber has an enterprise value of $196 billion.
A system of slavery
Precisely the salary is one of the strongest demands of Uber and Lyft drivers like Colombian Margarita Penalosa, who has worked for almost eight years with the companies.
“We worked under a system of slavery, especially after Proposition 22, where they promised us that we would have benefits and independence,” Penalosa stated. “What happened was that Proposition 22 pretty much gave them the right to do whatever they wanted to us.”
In effect, from earning 80% of a shared ride a decade ago and the remaining 20% for the company, the roles were reversed and both Uber and Lyft kept up to 70% of what each client paid and the drivers, despite working 12-hour shifts, earned below the minimum wage.
“In those days I earned an average of $300 to $400 a day, and now I practically earn $150 to $200,” Margarita reported.
Why did they last so long knowing they were being scammed like that?
“For many drivers this is the only means of income,” he responded. “Many drivers are older people; they do not have another job, another means of income and it is not so easy to find a job either.”
Because they are independent or temporary workers, Uber and Lyft companies have the power to disconnect those they wish from the application and leave them without work overnight, without giving an explanation and without facing any type of legal responsibility.
Likewise, all drivers must assume the costs of their vehicles, gasoline, oil, tires and maintenance.
“Imagine what I can do with the money I earn, if I have to pay $1,100 a month in rent for a small studio, and I also have to buy food, pay for cell phone, expenses and send money to my family in Colomba,” said Margarita. “To be honest, I’m living and financing myself with my credit card. That’s the reality.”
The labor injustices of Uber and Lyft
In 2016, Héctor Odín Castellanos suffered a car accident that left him without work for eight months, financially affecting his family.
Castellanos, now 55 years old, who has worked for Uber and Lyft for a decade, says that after that collision he underwent shoulder surgery.
“A girl who was probably driving open or high hit me,” he said. “I had a total loss of my car worth $18,000.”
The rideshare companies only offered him $2,500.
To cover household expenses, her daughter Ashley had to drop out of school.
Uber and Lyft companies are not responsible for accidents or the drivers’ families. They have no rights.
Instead, over the course of 10 years, Héctor Odín Castellanos has invested more than $100,000 in vehicles that have worn out over time, including a Prius, a Malibu, a truck, an SUV and a Tesla that he has put 113,000 miles on. Maintenance and repair costs have been significant, affecting your ability to save.
Born in Guadalajara, Jalisco, Héctor, now 55 years old, has been one of the Latino faces who fought for California to allow the unionization of independent drivers and the defense of their labor rights, through the AB 1340 law.
“I hope that unionization will allow us to fight for higher wages, health benefits and labor rights,” said the naturalized American immigrant. “It is important to get at least 80% of the fare for drivers.”
Héctor, who arrived in the United States in 2000, began fighting for justice and unionization, engaging in lobbying with California senators and legislators.
“I hope that the threshold for health insurance coverage will be lowered and that we will be paid a fairer percentage of the rates. The law should also include sick days and vacations.”
Now that they will be able to negotiate a collective contract by forming a union, Héctor hopes that his economic situation will change and he will also be able to protect his health.
“Look, the truth is that Uber and Lyft lied to all Californians, and particularly to the drivers, with Proposition 22,” he said. “They said they were going to pay us 120% above the minimum wage when we’re basically making $5 to $6 an hour now. I mean, we’re not even making the minimum wage.”
They were also promised health insurance and then traded it for paying excessively expensive premiums, to the point that no one qualified to pay the cost of Uber and Lyft health insurance.
“It was when we all preferred to be on Medical or Medicare or other insurance here in the state,” the Latino resident of San Francisco Bay told La Opinión.
