On October 8, 2025, California Governor Gavin Newsom signed a groundbreaking agreement that paves the way for Uber and Lyft drivers in the state to unionize, a move that represents a significant step forward in the ongoing fight for labor rights in the gig economy. The agreement is seen as a pivotal moment for gig workers, particularly those in the ridesharing sector, who have long struggled with inconsistent wages, limited benefits, and a lack of protections afforded to traditional employees. By creating a formal pathway for unionization, this legislation provides these workers with a mechanism to collectively bargain for better working conditions, higher wages, and improved benefits.
The deal, which was struck after months of negotiation, brings together key stakeholders, including labor unions, rideshare companies like Uber and Lyft, and state lawmakers. The agreement allows drivers in California to form unions and participate in collective bargaining—something that has long been unavailable to workers in the gig economy. However, the process of unionization will not be instantaneous. In order to begin forming unions, drivers must meet specific thresholds for signatures and votes, and the first wave of union negotiations is not expected to commence until at least May 2026.
While this deal is hailed as a major win for gig workers, it is not without its compromises. Under the new agreement, the right to unionize will be balanced by a reduction in insurance requirements for Uber and Lyft. As part of the legislation, the rideshare companies will see their required insurance coverage significantly reduced, with the per-incident uninsured motorist coverage dropping from $1 million to $60,000, and the per-accident coverage cap falling from $300,000 to $300,000. This change is expected to reduce insurance costs for the companies, with Uber and Lyft anticipating savings of up to $200 million. While this reduction in insurance requirements is expected to lower ride fares for consumers, it has raised concerns among some advocacy groups, who worry that such changes could undermine the safety protections for drivers and passengers.
The agreement has been praised by labor unions, with the Service Employees International Union (SEIU) particularly vocal in its support. SEIU has long advocated for better rights and protections for gig workers, and they view this agreement as a historic step toward addressing the inequities within the gig economy. Union representatives argue that the ability to negotiate collectively for wages, benefits, and job security is a long-overdue victory for Uber and Lyft drivers, who often face the challenge of working long hours without the job security and benefits that come with traditional employment.
Despite the progress, not all stakeholders are satisfied with the terms of the agreement. Some labor advocates have pointed out that the new legislation does not go far enough in ensuring pay transparency or in establishing strong enforcement mechanisms for fair pay and conditions. There are also concerns that the restrictions placed by Proposition 22, a 2020 law that prevents gig economy workers from being classified as employees, will limit the full potential of this unionization effort. Although the agreement provides a pathway for unions, it does not fully alter the status of Uber and Lyft drivers as independent contractors, meaning they will still not be entitled to the full range of benefits and protections afforded to traditional employees.
For many drivers, however, the new law represents a step toward improved security in their jobs and better conditions overall. The ability to form unions and collectively bargain is seen as a crucial tool for improving wages and ensuring that rideshare drivers are not left behind in an industry that is increasingly reliant on their labor. While the road to full unionization may be a long one, this agreement provides a much-needed framework for drivers to advocate for themselves and work together to secure fairer treatment in the gig economy.
Governor Newsom’s decision to sign the agreement is part of a broader movement to address labor rights within the rapidly growing gig economy. The deal has been hailed as a potential model for other states to follow, with many advocates calling for similar laws to be enacted nationwide. By giving gig workers a stronger voice and the tools to fight for better conditions, California is taking a major step in creating a more equitable future for workers in the gig economy. The full impact of the agreement will unfold in the coming years, but for now, it is clear that the unionization of Uber and Lyft drivers marks a critical turning point in the ongoing fight for labor rights in the gig economy.
