By: Sadie Smith

California has reached an agreement that will enable rideshare drivers to form a union, marking a significant step toward the reclassification of gig economy workers. Under the agreement, drivers will be able to negotiate for improved wages and employment benefits through the Service Employees International Union, in exchange for adjustments to insurance requirements.

California Reaches Landmark Rideshare Deal

The bill was titled Assembly Bill 1340. It was signed into law on October 3, 2025, after being introduced and passing through legislative processes in California. It has been tied to Senate Bill 371 and will reduce the amount of insurance protection required of drivers. As a result, this could lead to savings for passengers. Lyft and Uber agreed to this arrangement in exchange for the reduced insurance, effectively dropping their opposition to a separate union bill.

The two sides had battled for some time over this. In 2020, Uber and Lyft spent over $200 million in an effort to block Proposition 22. This measure aimed to reclassify app-based workers as traditional employees, subject to the same rules. The legal battle over Proposition 22 was resolved in 2024, upholding the classification of drivers as independent contractors.

Talks were held swiftly, lest another lengthy court battle take place between the two sides. Uber’s chief policy expert in Sacramento, Ramona Prieto, noted that “It wasn’t like this was months of negotiating.” It now opens the door for other states to follow suit, with California being the second to do so, after Massachusetts in 2024.

Who Is Responsible for Uber and Lyft Driver Accidents?

The opportunity to reduce insurance requirements will be significant for Uber and Lyft, both of which have complex responsibility rules that contribute to inflated insurance premiums. These companies must hold insurance coverage in case they are directly liable. This usually comes into play when certain situations occur, such as when a company continues to employ bad drivers or when a driver’s insurance refuses to pay out.

If you’ve been involved in an accident, it pays to find a specialist Lyft accident lawyer in Los Angeles. This is because the circumstances can be highly complex, making it more challenging to obtain the compensation you deserve. This is done through investigating the accident, identifying liability, handling claims, and maximising the compensation due. They even offer a complimentary consultation to discuss the situation and what you may be entitled to.

To grasp just how complicated these cases can be, you need to understand who is at fault, if that is easy to ascertain. The best scenario is when a third party is at fault. In this instance, insurance is pursued through their coverage, just like a standard motor claim.

When the driver has the rideshare app off, they are then liable on their own insurance. This proceeds as if they were at fault through their auto insurance policy. What really complicates things is when the app is on and the driver is waiting for the passenger’s arrival. Lyft and Uber’s insurance will cover the driver, although drivers may work for multiple companies simultaneously, making liability more complex to determine. They may also be running personal errands. When a driver is en route or a passenger is on board, then the rideshare company’s insurance takes over.

Bringing Rideshare Insurance Under Control

These scenarios, and insuring them, obviously come at a premium. Nick Johnson is the Director of Public Policy at Lyft. He has said this move will bring “runaway insurance costs under control.” This will reduce from $1 million to $60,000 per individual and $300,000 per accident for incidents caused by uninsured or underinsured drivers.

Uber was less vocal about the arrangement and called it a “Compromise”. Some have been vocally critical, saying that it favours the ride-share companies too much. Veena Dubal is a Professor of Law at UC Irvine. An expert on labor and inequality, she described it as “A sign of California politics that these large tech companies are literally getting their cake and eating it, too.”

This opinion on classifying gig workers as employees has not been limited to California. Across the world, particularly in Europe, there have been numerous strikes and protests by workers in the gig economy. These began as far back as 2016, when drivers from France held a mass anti-Uber protest in and around Paris. A global strike also took place in May of this year, which saw drivers across the world log off in protest at lowering wages, working conditions, and a demand for better protections.

Uber and Lyft do provide a valuable service, and there is no doubt they have revolutionized travel. To continue, they will have to adapt their practice and better protect their worker. This may involve making “compromises,” as Uber put it, and this will undoubtedly pave the way for more unions across the US and beyond. 

 

Disclaimer: This article provides an overview of the recent agreement between California, Uber, and Lyft regarding unionization for rideshare drivers. The information shared is for informational purposes only and does not constitute legal advice. If you are involved in a rideshare-related accident or need legal guidance, it is recommended to consult with a qualified attorney to discuss your specific situation.