AB 1340: A Major Shift for California Rideshare Drivers
California has long been a key battleground for gig worker rights, especially for rideshare companies. It affects how they classify and pay workers. With the signing of Assembly Bill 1340, the state is taking a major step. It aims to reshape the relationship between platforms and drivers in California.
Signed into law on October 3, 2025, AB 1340—also known as the Transportation Network Company Drivers Labor Relations Act—grants rideshare drivers the power to bargain collectively while still maintaining their independent contractor status.
At Shimoda & Rodriguez Law, PC, we have spent years advocating for employee and worker protections across California. This new law marks a major turning point in labor law. It especially affects gig workers, who have long lacked many protections traditional employees receive. With more than 800,000 drivers affected, AB 1340 changes how Uber and Lyft work with drivers. It mainly impacts pay, benefits, and working conditions.
What Does AB 1340 Do?
AB 1340 gives rideshare drivers the legal right to:
- Form or join a union
- Participate in sectoral collective bargaining
- Negotiate industry-wide agreements on pay and working conditions
Organizations such as California Gig Workers Union have already begun mobilizing to help drivers understand and exercise these new rights.
This is a major development in California labor law because it allows drivers to organize and negotiate collectively, without being reclassified as employees. That distinction is critical, particularly in light of ongoing debates surrounding California Proposition 22 (Prop 22), which previously reinforced independent contractor status for app-based drivers.
Independent Contractor Status Remains
One of the most unique parts of AB 1340 is that it lets drivers keep their independent contractor status. It also gives them collective bargaining rights.
Historically, unionization has been closely tied to employee classification. However, AB 1340 introduces a hybrid model that gives drivers in California more influence over their pay and working conditions without changing their legal classification.
This distinction matters because it keeps the flexibility many gig workers value, like setting their own hours. It also gives them a clear way to push for better treatment. For drivers who have been navigating the limitations of Prop 22, this law introduces a new layer of protection without fully overturning the existing framework.
What Is Sectoral Collective Bargaining?
Sectoral collective bargaining allows workers across an entire industry, not just a single company, to negotiate standards collectively.
Under AB 1340, this means:
- Rideshare drivers can negotiate minimum pay standards across platforms
- Working conditions can be standardized across multiple rideshare companies
- Benefits such as insurance, reimbursements, and safety protections may be negotiated at scale
This approach differs from traditional labor models, where negotiations typically occur between a single employer and its employees. Instead, AB 1340 introduces a broader system that could reshape how rideshare companies operate across California.
If successful, this model may guide other gig-based industries, like delivery services and freelance platforms.
New Obligations for Companies Like Uber and Lyft
AB 1340 places new legal responsibilities on transportation network companies, including Uber and Lyft.
These companies are now required to:
- Engage in good faith negotiations with driver representatives
- Participate in the collective bargaining process
- Comply with industry-wide standards once agreements are reached
This represents a significant shift in how rideshare companies must operate. Previously, many of these companies relied heavily on independent contractor classifications to avoid traditional employment obligations. Now, while that classification remains intact, the expectation to negotiate under structured labor law frameworks introduces new accountability.
Failure to comply with these obligations could expose companies to legal risks, regulatory penalties, and potential litigation.
What This Means for Drivers
For drivers in California, AB 1340 could lead to meaningful improvements in several areas:
- More consistent and transparent pay structures
- Improved protections and safer working conditions
- A formal voice in negotiations that directly impact their day-to-day work
This is especially important in an industry where compensation can fluctuate, and policies can change quickly. By allowing drivers to collectively negotiate, AB 1340 provides a pathway toward greater stability.
However, the law’s full impact will depend on how well drivers organize. It will also depend on how talks with rideshare companies unfold over time.
Looking Ahead
AB 1340 represents a significant evolution in California labor law, particularly for gig workers navigating the complexities of independent contractor status.
By combining collective bargaining rights with contractor flexibility, the law introduces a new framework that could redefine how drivers in California interact with rideshare companies.
As implementation begins, both drivers and companies must stay informed and prepared for changes in the industry. Legal guidance and proactive planning will be key to navigating this transition successfully.
Are You a Rideshare Driver Facing Unfair Treatment?
While AB 1340 creates new opportunities for collective bargaining, it does not eliminate the risk of unfair practices. Some rideshare companies may still attempt to sidestep their obligations under California labor law.
If you believe your rights have been violated, or you have questions about wage and hour standards in the gig economy, the team at Shimoda & Rodriguez Law, PC is here to help. Contact us today for a consultation to ensure you are receiving the protection you deserve.