Prop 22 and App-Based Drivers: Contractor Status After Castellanos
December 16, 2020, is the date Proposition 22 took effect and the date app-based drivers in California stopped being judged by the ABC test, as long as the network company follows four rules. In Castellanos v. State of California (2024) 16 Cal.5th 588, the Supreme Court of California rejected the main constitutional challenge to the measure. Contractor status for app-based drivers is settled law. Whether a particular company has kept the four conditions in place is the question a misclassification claim will test.
What does Prop 22 provide?
Contractor status for app-based drivers, on conditions. Business and Professions Code section 7451 provides that, “Notwithstanding any other provision of law, including, but not limited to, the Labor Code,” an “app-based driver is an independent contractor and not an employee or agent with respect to the app-based driver’s relationship with a network company if the following conditions are met.”
The conditions are about flexibility. Under the statute, the network company may not unilaterally set “specific dates, times of day, or a minimum number of hours” a driver must be logged in. It may not “require the app-based driver to accept any specific rideshare service or delivery service request as a condition of maintaining access” to the platform. And it may not restrict the driver from working through other network companies, except during engaged time, or “from working in any other lawful occupation or business.”
Which businesses does Prop 22 cover?
Only network companies. The definitions section defines a network company as “a business entity that is a DNC or a TNC,” meaning a delivery network company or a transportation network company. A delivery network company is one that “maintains an online-enabled application or platform used to facilitate delivery services within the State of California on an on-demand basis.”
A restaurant, grocer, or retailer that hires its own delivery drivers isn’t a network company and gets nothing from Prop 22. Those drivers are judged under the ordinary tests, which in California usually means the ABC test in Labor Code section 2775. A business that uses a third-party platform, on the other hand, usually isn’t the network company either, though a driver may try to name it as a joint employer.
What did Castellanos decide?
That Prop 22’s core classification provision is constitutional. The challengers argued that section 7451 conflicted with the Legislature’s constitutional power over workers’ compensation. The court disagreed, holding “that section 7451 does not conflict with article XIV, section 4 because the latter provision does not preclude the electorate from exercising its initiative power to legislate on matters affecting workers’ compensation.”
The opinion’s conclusion is narrow and direct: “We affirm the judgment of the Court of Appeal insofar as it held that Business and Professions Code section 7451 does not conflict with article XIV, section 4 of the California Constitution.” The Court of Appeal had separately struck two provisions of section 7465 that limited future legislative amendments. The Supreme Court noted those provisions “are not before us,” so the classification rule stands while those amendment limits don’t.
The court also left a question open. It said that whether section 7451 conflicts with later legislation “is not before us, and we express no view on it.” Network companies shouldn’t read Castellanos as the end of all litigation over driver status. It resolved the constitutional challenge, not every claim that a company failed to meet the statute’s conditions.
Where do Prop 22 claims come from now?
From the four conditions. A driver who can show the company required set hours in practice, deactivated drivers for declining too many requests, or barred working for competitors can argue section 7451 doesn’t apply to that relationship. If it doesn’t, the driver argues the ABC test governs and that the driver was misclassified.
Acceptance-rate policies deserve close attention. The statute bars requiring acceptance of “any specific” request as a condition of access. Incentive programs that reward high acceptance rates are different from deactivation for low ones, but the line is easy to blur in practice. The written policy, the deactivation records, and the messages drivers actually received will decide which side a company is on.
Other claims don’t challenge status at all. Prop 22 imposes its own obligations, and a driver who concedes contractor status can still sue over them.
What does Prop 22 require network companies to pay and provide?
An earnings floor, among other things. Under section 7453, a network company “shall ensure that for each earnings period, an app-based driver is compensated at not less than the net earnings floor.” The floor includes “120 percent of the applicable minimum wage” for engaged time, plus per-mile compensation that started at “thirty cents ($0.30) per engaged mile” and adjusts each year for inflation.
Engaged time is narrower than total time logged in. The definition runs “from when an app-based driver accepts a rideshare request or delivery request to when the app-based driver completes that rideshare request or delivery request.” Time waiting for a request isn’t counted, which is one of the main differences from an employee’s hours worked.
Prop 22 also has its own antidiscrimination rule. Section 7456 bars refusing to contract with, terminating, or deactivating a driver on listed protected characteristics. It directs that claims “shall be brought solely under the procedures established by the Unruh Civil Rights Act,” not the FEHA, which shapes the forum and remedies.
How does the 2025 rideshare bargaining law change things?
It adds collective bargaining without changing status. AB 1340, enacted as Chapter 335, Statutes of 2025, added the Transportation Network Company Drivers Labor Relations Act to the Business and Professions Code. It applies to rideshare companies, not delivery companies.
The act keeps Prop 22’s core terms off the bargaining table. A sectoral agreement under section 7470.13 “shall not contain a provision” that “Restrains TNC drivers’ flexibility to choose work opportunities as protected by Section 7451,” or that “Alters or purports to alter the legal status of TNC drivers as independent contractors as established by Section 7451.” Rideshare companies now face a bargaining process, but not a reclassification through it.
How do Prop 22’s conditions compare?
| Condition in § 7451 | What breaks it | Evidence that usually decides it |
|---|---|---|
| No required dates, times, or minimum hours | Mandatory shifts or minimum logged-in time | Scheduling rules, app settings, driver messages |
| No required acceptance of specific requests | Deactivation or loss of access for declining requests | Deactivation records, acceptance-rate policies |
| No bar on other network companies | Exclusivity terms outside engaged time | Driver agreement, enforcement history |
| No bar on other occupations | Restrictions on outside work | Driver agreement, onboarding materials |
What should a network company do once a driver claim arrives?
Prop 22 claims are about whether the conditions held in practice. Collect the proof of how the platform actually ran.
- Preserve the driver agreement in every version, app configuration and policy changes, the driver’s trip and engaged-time data, earnings statements, deactivation records, and messages sent to the driver.
- Calendar the deadline on the complaint, arbitration demand, or PAGA notice, and check the arbitration agreement’s terms and any insurance policy with notice requirements.
- Identify the people who wrote the scheduling and acceptance rules or made deactivation decisions, and pause any further action against the driver until counsel has reviewed it.
- Test each of the four section 7451 conditions against the driver’s actual experience, and confirm the earnings-floor calculation for each earnings period.
- Talk to a lawyer before responding, changing platform rules, or offering anything to resolve the claim.
Companies looking for employment litigation defense for California companies can review the firm’s practice page.
Prop 22 questions from California businesses
Does Prop 22 protect a restaurant that uses its own delivery drivers?
No. Prop 22 applies only to network companies operating app-based platforms. A restaurant’s own drivers are judged under Labor Code section 2775 and the ordinary employment rules. Most restaurant delivery drivers will be employees under that test, so the safer course is to treat them that way.
Can a network company require drivers to log in during busy periods?
Not unilaterally. Section 7451 bars the company from prescribing “specific dates, times of day, or a minimum number of hours” for logging in. Incentives for driving at peak times are a different matter, as long as drivers who skip them keep full access to the platform. Write the incentive terms so that no one can read them as a requirement.
Did Castellanos end all challenges to Prop 22?
No. It rejected the workers’ compensation challenge to section 7451 and left some questions open, including whether later statutes conflict with it. Individual drivers can still argue that a company didn’t meet the section 7451 conditions in their case. The decision settles the law, not each company’s compliance.
Are app-based drivers covered by the FEHA?
Prop 22 sends their discrimination claims elsewhere. Under section 7456, claims are brought “solely under the procedures established by the Unruh Civil Rights Act.” A driver who argues the section 7451 conditions weren’t met may also try to bring employment-based claims, which is why the conditions matter in every case.
If a driver claim reaches your company
If your company has received a misclassification lawsuit, arbitration demand, or PAGA notice from an app-based driver, the platform’s scheduling and acceptance rules and its deactivation records usually decide how much of the claim is real. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving app-based driver classification. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The statutes are Business and Professions Code section 7451, section 7453, section 7456, section 7463, section 7470.13, and Labor Code section 2775. The decision is Castellanos v. State of California (2024) 16 Cal.5th 588, a published decision of the Supreme Court of California.
This post is general information about California employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.