After a decade of struggle, 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, written by Assemblymembers Buffy Wicks (D-Oakland) and Marc Berman (D-Menlo Park), validating the efforts of thousands of workers.

“This is a historic agreement between workers and businesses that only California could achieve. Workers 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’s proof that California can accomplish great things, tackle complex problems, and improve people’s lives,” he added.

The signing of the Transportation Network Company (TNC) Driver Labor Relations Act came as the Trump administration attempts to dismantle unions.

In California, the opposite has happened. The strength of the Service Employees International Union Local 721 and the unity of the workers made it possible to do what for many was impossible: win the right to unionize for 800,000 individuals.

“Every day, I remind people that the resistance against the Trump administration is not only about taking to the streets, but also joining unions,” said Martin Manteca, director of the California Enforcement Drivers Union.

“It’s a resistance because under the Trump administration, oligarchs and billionaires are trying to destroy the only place where American workers can advocate for their rights, which are through unions,” he said.

“That’s why this victory means that Trump is not winning,” he added. “If [Trump] took away the right to unionize from half a million federal workers, we won the right for 800,000. And that’s just the beginning.”The people have spoken and they have 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 will multiply in different states across the country, so that drivers can defend their employment contracts themselves,” reported Martin Manteca.

In May 2026, the process will begin to legally request the formation of a union for Uber and Lyft drivers, who, in Southern California, represent 75% of all trips in California.

Once the signatures are ratified (10% of the total drivers), labor authorities would proceed to ratify the union.

This would mean workers sitting at the bargaining table with employers to achieve better wages, health benefits, and labor rights for thousands.

Insurance costs and ride prices will be lower

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 ridesharing services by reducing the insurance requirement that requires drivers to have $1 million in coverage for accidents caused by other uninsured or underinsured drivers. The agreement reduces that amount to $60,000 in coverage for uninsured drivers per person and $300,000 per accident.

“This agreement is a huge win for both passengers and drivers in California,” said Nick Johnson, director of public policy at Lyft, in a statement.

“By controlling costs uncontrolled insurance, we can help keep ridesharing affordable without sacrificing the right protections, allowing people to more easily get to their medical appointments, the airport, or just to work each morning,” he added.

“Plus, more rides mean higher earnings for drivers, which helps them hit their goals,” he said.

In February of this year, Lyft CEO David Risher reported revenue of $1.6 billion, up 27% year-over-year and $10 million more than expected.

Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) nearly doubled, bringing Lyft to $112.8 billion, beating estimates of $104.4 million.

Uber Expects Millions in Profits

Ramona Prieto, Uber’s director of public policy 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 lower fares for riders 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 forecast Uber's revenue and adjusted EBITDA will grow 17% and 34%, respectively, by 2025. Uber has an enterprise value of $196 billion.

A System of Slavery

Salary is precisely one of the strongest demands of Uber and Lyft drivers like Colombian Margarita Penalosa, who has worked with the companies for nearly eight years.

"We worked under a system of slavery, especially after Prop 22, where they promised us that we would have benefits and independence," Penalosa said. "What happened was that Prop 22 practically gave them the right to do whatever they wanted with us."

Indeed, from earning 80% of a shared ride a decade ago and the remaining 20% ??for the company, the roles have now been reversed, with both Uber and Lyft keeping up to 70% of what each customer paid, and drivers, despite working 12-hour shifts, earning below minimum wage.

“Back then, I earned an average of $300 to $400 a day, and now I practically earn $150 to $200,” Margarita reported.

Why did they put up with it so long knowing they were being scammed in this way?

“For many drivers, this is their only means of income,” she responded. “Many drivers are older; they don’t have another job, another means of income, and it’s not that easy to find a job.”

As independent or temporary workers, Uber and Lyft have the power to remove anyone they want from the app and leave them without work overnight, without explanation and without facing any legal liability.

Furthermore, 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,"I need to pay for my cell phone, bills, and send money to my family in Colombia," Margarita said. "To be honest, I'm living and financing myself with my credit card. That’s the reality.”

Uber and Lyft’s Labor Injustices

In 2016, Hector Odin Castellanos was involved in a car accident that left him out of work for eight months, financially impacting his family.

Castellanos, now 55, who has worked for Uber and Lyft for a decade, says that after the collision, he underwent shoulder surgery.

“A girl who was probably driving drunk or high hit me,” he said. “My car, which was worth $18,000, was a total loss.”

Rideshare companies only offered him $2,500.

To cover household expenses, his daughter Ashley had to drop out of school.

Uber and Lyft are not responsible for accidents or the families of drivers. They have no rights.

In Over the course of 10 years, Hector Odin Castellanos has invested more than $100,000 in vehicles that have worn out over time, including a Prius, a Malibu, a pickup truck, an SUV, and a Tesla that he has put 113,000 miles on. Maintenance and repair costs have been significant, impacting his ability to save.

Born in Guadalajara, Jalisco, Hector, now 55, has been one of the Latino figures fighting for California to allow the unionization of independent drivers and defend their labor rights through law AB 1340.

“I hope that unionization will allow us to fight for higher wages, health benefits, and labor rights,” said the naturalized U.S. immigrant. “It’s important to get at least 80% of the fare for the drivers.”

Hector, who arrived in the United States in 2018, In 2000, he began fighting for justice and unionization, becoming involved in lobbying with California senators and legislators.

“I hope the threshold for health insurance coverage is lowered and that we are paid a fairer percentage of the fares. The law should also include sick and vacation days.”

Now that they will be able to negotiate a collective bargaining agreement by forming a union, Hector hopes his financial 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 drivers in particular, with Prop. 22,” he said. “They said they were going to pay us 120% above minimum wage when we basically earn $5 to $6 an hour now. In other words, we don't even make minimum wage.”

They were also promised health insurance, which they later changed due to excessively high premiums, to the point that no one qualified to pay for Uber and Lyft's health insurance.

“That was when we all preferred to be on Medicare or Medicare or other insurance plans here in the state,” the Latino resident of the San Francisco Bay Area told La Opinion.