Uber and Lyft have joined forces with California lawmakers to give rideshare drivers a new way to unionize and negotiate pay and benefits. The deal includes a bill, AB 1340, that would let drivers bargain collectively under state supervision. This is coupled with another law, SB 371, supported by the rideshare companies, that lowers the state’s insurance requirements for uninsured motorist coverage.
The legislation was announced on Friday by California’s Governor Gavin Newsom and legislative leaders. AB 1340 was sponsored by the Service Employees International Union (SEIU) and is modeled after a similar measure passed by voters in Massachusetts. The new approach aims to give about 800,000 drivers in California a chance to organize across the industry, even though they remain classified as independent contractors — a status voters confirmed with Prop 22 in 2020.
Since federal labor laws don’t cover gig workers like drivers, this state-level solution offers a fresh way for them to negotiate work conditions outside the usual union frameworks. David Green, president of SEIU Local 721, called it the largest expansion of private sector collective bargaining in California’s history.
On the insurance front, the agreement reduces how much uninsured motorist coverage Uber and Lyft must carry for their drivers. Both companies said this would help lower costs for riders. Uber states that insurance makes up about a third of the fare in California and nearly half in Los Angeles, largely due to the uninsured motorist coverage demands.
Uber has been pushing for insurance reforms for some time and has taken legal action against those it claims submit fraudulent insurance claims. Bringing down these insurance costs is a priority for the company.
Representatives from both firms welcomed the news. Ramona Prieto, Uber’s head of public policy in California, said the state’s move to make ridesharing more affordable is a positive step. Nick Johnson, Lyft’s director of public policy, called the deal a win for drivers and riders alike.
This deal could set a new example for how drivers worldwide can secure better working conditions while keeping costs manageable for customers. It also shows how states might step in to create solutions where federal laws don’t fully apply.