California's Uber and Lyft unionization law, explained

Drivers now have collective bargaining rights after years of political, legal battles.

- BY SUHAUNA HUSSAIN AND MELODY GUTIERREZ

MARIO TAMA Getty Images

THE LAW is a rare compromise between labor unions and Silicon Valley gig economy companies.

Gov. Gavin Newsom on Friday signed into law a deal that will allow hundreds of thousands of ride-hail drivers to unionize and bargain collectively while still being classified as independent contractors.

The legislation — a rare compromise between labor groups and Silicon Valley gig economy companies — grants collective bargaining rights to Uber and Lyft drivers, and follows years of political and legal battles over the job status of ride-hail and delivery drivers.

The new law does not apply to other types of gig workers, including those who deliver food through apps such as DoorDash.

Besides the collective bargaining bill, Newsom also signed a law backed by Uber and Lyft that would significantly reduce the companies’ insurance requirements.

Newsom, with his signing of the deal, drew a contrast with President Trump’s posture toward workers and labor unions, with his administration banning collective bargaining at half a dozen federal agencies.

"Donald Trump is holding the government hostage and stripping away worker protections. In California, we're doing the opposite: proving government can deliver," Newsom said in a statement. "That's the difference between chaos and competence."

Labor leaders from Service Employees International Union California, a powerful union that has been working for years to organize app-based drivers, say the deal is one of the largest expansions of private sector unions in 90 years, allowing hundreds of thousands of California gig drivers to gain a seat at the bargaining table.

It does so by exempting workers from the state and federal antitrust laws that normally prohibit collective action by independent contractors.