Castellanos et al. v. State of California et al. is a long-running challenge to Proposition 22, a voter approved measure in 2020 to authorize app-based drivers to be considered independent contractors if certain conditions are met.
There are several arguments put forth by opponents to Prop 22 as to why it should be permanently enjoined by the Courts. The one of particular interest is that workers’ compensation laws cannot be made through the initiative process. This is arguably because of the oft-cited “plenary authority” of the Legislature on the subject of workers’ compensation, “unlimited by any provision of this Constitution.” This is found in Article XIV, Sec. 4 of California’s Constitution.
Stakeholders noted this sweeping exception when it came time to decide whether Independent Medical Review (IMR) was protected against due process challenges. As the Court of Appeal noted in Stevens v. Workers’ Comp. Appeals Bd. (2015), 241 Cal. App. 4th 1074, 194 Cal. Rptr. 3d 469, “Section 4 also trumps the state Constitution’s due process clause.”
There are a number of arguments to suggest the analysis of opponents of Prop 22, and the Superior Court of the State of California in Alameda County, are misplaced. Those will be raised in multiple themes and variations of the parties and the many amici curiae who have taken a great interest in this matter.
The California Court of Appeal for the First Appellate District heard oral arguments on this case December 13th. Expect a decision sometime next year. It can also be expected that the Supreme Court will be asked to weigh in regardless of the decision.
The outcome to the workers’ compensation system is consequential regardless of the decision.
Given the entrenched acrimony surrounding the independent contractor issue since the Dynamex case, and its subsequent codification via Assembly Bill 5, that the Legislature will not be keen on brokering a compromise.
This may seem like a bit of esoterica coming this late in the year. But consider how many times over the decades employers have raised the specter of a workers’ compensation initiative to affect outcomes in Sacramento. If that does not ring a bell, ask Arnold Schwarzenegger.
Initiative, and its close relative referendum, are powers reserved to the people. When placed in California’s Constitution – at the same 1911 election the first workers’ compensation provisions were also added – legislative sponsors of the measure said:
“It is not intended and will not be a substitute for legislation but will constitute that safeguard which the people should retain for themselves, to supplement the work of the legislature by initiating those measures which the legislature either viciously or negligently fails or refuses to enact; and to hold the legislature in check, and veto or negative such measures as it may viciously or negligently enact. All objections finally and ultimately center in a distrust of democracy; in a challenge of the power of the people to govern themselves.”
While this prose was authored over a century ago, the need to retain these safeguards is as important now as it was then. If the Courts remove them, then the constitutional moat that surrounds workers’ compensation will have the drawbridge pulled up, with the People looking on from the outside.
Note: The opinions expressed herein may or may not be those of Workers’ Comp Executive. Mark Webb is a former Arizona insurance regulator, insurance company chief compliance officer, and is an expert in corporate governance, risk and compliance. He is the owner of Prop 23 Advisors.