Castellanos v. State of California

IN THE SUPREME COURT OF

CALIFORNIA

HECTOR CASTELLANOS et al.,

Plaintiffs and Respondents,

v.

STATE OF CALIFORNIA et al.,

Defendants and Appellants;

PROTECT APP-BASED DRIVERS AND SERVICES et al.,

Interveners and Appellants.

S279622

First Appellate District, Division Four

A163655

Alameda County Superior Court

RG21088725

July 25, 2024

Justice Liu authored the opinion of the Court, in which Chief

Justice Guerrero and Justices Corrigan, Kruger, Groban,

Jenkins, and Evans concurred.

CASTELLANOS v. STATE OF CALIFORNIA

S279622

Opinion of the Court by Liu, J.

This case concerns Business and Professions Code section

7451, which was enacted by the voters through Proposition 22

(Gen. Elec. (Nov. 3, 2020)), the Protect App-Based Drivers and

Services Act (Proposition 22) (Bus. & Prof. Code, §§ 7448–7467;

all undesignated statutory references are to this code). Under

section 7451, a driver for an app-based transportation or

delivery company, such as Uber Technologies, Inc. (Uber), Lyft,

Inc. (Lyft), or DoorDash, Inc., is an independent contractor and

not an employee of the company as long as several conditions

are met. As a result of section 7451, app-based drivers are not

covered by California workers’ compensation laws, which

generally apply to employees and not to independent

contractors.

Plaintiffs Hector Castellanos, Joseph Delgado, Saori

Okawa, Michael Robinson, Service Employees International

Union California State Council, and Service Employees

International Union assert that section 7451 conflicts with

article XIV, section 4 of the California Constitution, which vests

the Legislature “with plenary power, unlimited by any provision

of this Constitution, to create, and enforce a complete system of

workers’ compensation, by appropriate legislation.” (Cal.

Const., art. XIV, § 4; all undesignated article references are to

the California Constitution.) They further contend that because

section 7465 and article II, section 10, subdivision (c) (article II,

section 10(c)) together operate to require voter approval of any

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legislation amending section 7451, those provisions restrict the

Legislature’s “unlimited” power to govern workers’

compensation under the terms of article XIV, section 4.

Interveners Protect App-Based Drivers and Services, Davis

White, and Keith Yandell acknowledge that section 7465 and

article II, section 10(c) would restrict the Legislature’s power to

restore app-based drivers’ eligibility for workers’ compensation,

but they see no inconsistency between this effect of Proposition

22 and article XIV, section 4. The Attorney General contends

that although section 7465 and article II, section 10(c) may

conflict with article XIV, section 4, those provisions are not

before us. According to the Attorney General, the sole provision

at issue in this case, section 7451, does not itself conflict with

article XIV, section 4 because the latter provision does not

assign the Legislature sole authority, to the exclusion of the

initiative power, to govern workers’ compensation.

We agree with the Attorney General 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. Whether the operation of section 7465 and

article II, section 10(c) improperly constrains the Legislature’s

article XIV, section 4 authority to enact future legislation is not

presented here, and we express no view on that question.

I.

Article XIV, section 4 provides in relevant part: “The

Legislature is hereby expressly vested with plenary power,

unlimited by any provision of this Constitution, to create, and

enforce a complete system of workers’ compensation, by

appropriate legislation, and in that behalf to create and enforce

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a liability on the part of any or all persons to compensate any or

all of their workers for injury or disability . . . .” A “complete

system of workers’ compensation” includes, among other things,

“adequate provisions for the comfort, health and safety and

general welfare of any and all workers,” “full provision for

securing safety in places of employment,” and “full provision for

adequate insurance coverage against liability to pay or furnish

compensation.” (Ibid.) “[A]ll of which matters are expressly

declared to be the social public policy of this State.” (Ibid.)

“The right to workers’ compensation benefits is ‘wholly

statutory,’ ” “exclusive of all other statutory and common law

remedies, and substitutes a new system of rights and obligations

for the common law rules governing liability of employers for

injuries to their employees.” (Graczyk v. Workers’ Comp.

Appeals Bd. (1986) 184 Cal.App.3d 997, 1002, 1003.) The

workers’ compensation statutes are based on the theory that the

common law remedy for work injuries “involves intolerable

delay and great economic waste, gives inadequate relief for loss

and suffering, operates unequally as between different

individuals in like circumstances, and . . . is inequitable and

unsuited to the conditions of modern industry.” (Western Indem.

Co. v. Pillsbury (1915) 170 Cal. 686, 693 (Western Indemnity).)

In 2019, the Legislature enacted Assembly Bill No. 5

(2019–2020 Reg. Sess.) (Assembly Bill 5) to address “[t]he

misclassification of workers as independent contractors,” which

it identified as “a significant factor in the erosion of the middle

class and the rise in income inequality.” (Stats. 2019, ch. 296,

§ 1, subd. (c).) The Legislature sought to ensure that

misclassified workers “have the basic rights and protections

they deserve under the law, including a minimum wage,

workers’ compensation if they are injured on the job,

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unemployment insurance, paid sick leave, and paid family

leave.” (Stats. 2019, ch. 296, § 1, subd. (e).) To achieve this aim,

Assembly Bill 5 codified the “ABC test” set forth in Dynamex

Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903.

(Stats. 2019, ch. 296, § 1.) Under that test, a worker is an

independent contractor only if the hiring entity establishes: “(A)

that the worker is free from the control and direction of the hirer

in connection with the performance of the work, both under the

contract for the performance of the work and in fact; (B) that the

worker performs work that is outside the usual course of the

hiring entity’s business; and (C) that the worker is customarily

engaged in an independently established trade, occupation, or

business of the same nature as the work performed for the hiring

entity.” (Dynamex, at pp. 916–917; see Lab. Code, § 2775,

subd. (b)(1).)

Assembly Bill 5 took effect in January 2020. (Stats. 2019,

ch. 296, § 2.) In October 2020, the Court of Appeal in People v.

Uber Technologies, Inc. (2020) 56 Cal.App.5th 266, 273,

prohibited Uber and Lyft from misclassifying their drivers as

independent contractors under Assembly Bill 5. The court said

“we have little doubt the Legislature contemplated that those

who drive for Uber and Lyft would be treated as employees”

under Assembly Bill 5. (Uber Technologies, at p. 297.)

In November 2020, Protect App-Based Drivers and

Services supported Davis White and Keith Yandell in placing

Proposition 22 on the general election ballot. Proposition 22

states that its purposes are to “protect the basic legal right of

Californians to choose to work as independent contractors with

rideshare and delivery network companies,” “protect the

individual right of every app-based rideshare and delivery

driver to have the flexibility to set their own hours for when,

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where, and how they work,” and “require rideshare and delivery

network companies to offer new protections and benefits for app-

based rideshare and delivery drivers, including minimum

compensation levels, insurance to cover on-the-job injuries,

automobile accident insurance, health care subsidies for

qualifying drivers, protection against harassment and

discrimination, and mandatory contractual rights and appeal

processes.” (§ 7450, subds. (a), (b) & (c).) Proposition 22 passed

with the support of 58.6 percent of the voters and enacted

sections 7448 to 7467 of the Business and Professions Code.

Section 7451 is the focus of this appeal. It provides:

“Notwithstanding any other provision of law, including, but not

limited to, the Labor Code, the Unemployment Insurance Code,

and any orders, regulations, or opinions of the Department of

Industrial Relations or any board, division, or commission

within the Department of Industrial Relations, 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: [¶] (a) The

network company does not unilaterally prescribe specific dates,

times of day, or a minimum number of hours during which the

app-based driver must be logged into the network company’s

online-enabled application or platform. [¶] (b) The network

company does not require the app-based driver to accept any

specific rideshare service or delivery service request as a

condition of maintaining access to the network company’s

online-enabled application or platform. [¶] (c) The network

company does not restrict the app-based driver from performing

rideshare services or delivery services through other network

companies except during engaged time. [¶] (d) The network

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company does not restrict the app-based driver from working in

any other lawful occupation or business.” (§ 7451.)

The statute defines a “ ‘[n]etwork company’ ” as a business

entity that “maintains an online-enabled application or platform

used to facilitate delivery [or transportation] services within the

State of California on an on-demand basis . . . .” (§ 7463,

subds. (l), (f); see id., subd. (p).) Network companies are

required to provide app-based drivers certain benefits and

protections, including “a guaranteed minimum level of

compensation for app-based drivers that cannot be reduced”

(§ 7453, subd. (a)), “a quarterly health care subsidy to qualifying

app-based drivers” (§ 7454, subd. (a)), and “occupational

accident insurance to cover medical expenses and lost income

resulting from injuries suffered while the app-based driver is

online” (§ 7455, subd. (a)).

Section 7465 specifies the procedure for amending

Proposition 22: “After the effective date of this chapter, the

Legislature may amend this chapter by a statute passed in each

house of the Legislature by rollcall vote entered into the journal,

seven-eighths of the membership concurring, provided that the

statute is consistent with, and furthers the purpose of, this

chapter.” (§ 7465, subd. (a).) “Any statute that amends Section

7451 does not further the purposes of this chapter.” (§ 7465,

subd. (c)(2).)

Section 7467 states that “the provisions of this chapter are

severable. If any portion, section, subdivision, paragraph,

clause, sentence, phrase, word, or application of this chapter is

for any reason held to be invalid by a decision of any court of

competent jurisdiction, that decision shall not affect the validity

of the remaining portions of this chapter.” (§ 7467, subd. (a).)

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But “if any portion, section, subdivision, paragraph, clause,

sentence, phrase, word, or application of Section 7451 . . . is for

any reason held to be invalid by a decision of any court of

competent jurisdiction, that decision shall apply to the entirety

of the remaining provisions of this chapter, and no provision of

this chapter shall be deemed valid or given force of law.”

(§ 7467, subd. (b).)

In February 2021, plaintiffs filed a petition for writ of

mandate in Alameda County Superior Court, naming the State

of California and Katie Hagen, Director of the Department of

Industrial Relations, as defendants. By stipulation of the

parties, the trial court granted interveners leave to oppose the

petition as real parties in interest. The petition alleged that

“Proposition 22 conflicts with article XIV, section 4, by

purporting to entirely remove app-based drivers from the

‘complete system of worker’s compensation’ the Legislature has

extended to them and to limit the authority of the Legislature to

extend such worker’s compensation benefits to app-based

drivers in the future.” Plaintiffs further contended that “the

entirety of Proposition 22 must be invalidated” because section

7451 is not severable. Plaintiffs also argued that other

provisions of Proposition 22 not before us in this appeal are

invalid.

The trial court found Proposition 22 “constitutionally

problematic” because under article II, section 10(c), “the

Legislature may not act to amend or repeal an initiative statute

without a subsequent vote of the people.” Although the court

concluded that the people have authority to enact workers’

compensation laws through the initiative power, the court

characterized section 7451 as “an unconstitutional continuing

limitation on the Legislature’s power to exercise its plenary

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power to determine what workers must be covered or not

covered by the worker’s compensation system.” The court

explained, “[I]f the People wish to use their initiative power to

restrict or qualify a ‘plenary’ and ‘unlimited’ power granted to

the Legislature, they must first do so by initiative constitutional

amendment, not by initiative statute.” Given that section 7451

is not severable, the court held Proposition 22 invalid in its

entirety. The court also held Proposition 22 unconstitutional on

other grounds not at issue here.

The Attorney General and interveners appealed, and a

divided Court of Appeal reversed. The court first concluded that

under article XIV, section 4, the voters and the Legislature

“jointly and severally have authority to create a workers’

compensation system.” (Castellanos v. State (2023) 89

Cal.App.5th 131, 150 (Castellanos).) Relying on Independent

Energy Producers Association v. McPherson (2006) 38 Cal.4th

1020 (McPherson), the court reasoned that article XIV, section 4

does not “require every worker to be covered by workers’

compensation.” (Castellanos, at p. 155.) Observing that “courts

must liberally construe the initiative power and resolve doubts

in favor of the use of the initiative wherever reasonable,” the

Court of Appeal held that Proposition 22 does not conflict with

article XIV, section 4. (Castellanos, at p. 150; see id. at p. 157.)

The court affirmed the trial court’s judgment insofar as it

invalidated severable provisions of Proposition 22 — section

7465, subdivisions (c)(3) and (c)(4) — which are not before us in

the present matter. (Castellanos, at pp. 163–177.)

Justice Streeter disagreed with the Court of Appeal’s

conclusion that Proposition 22 does not conflict with article XIV,

section 4. He explained that Proposition 22 “constitutes a sub

rosa attempt to amend the Constitution in the guise of statutory

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change” and “presents a direct conflict between the voter

electors’ power to adopt initiative statutes and the Legislature’s

power under article XIV, section 4.” (Castellanos, supra, 89

Cal.App.5th at p. 178 (conc. & dis. opn. of Streeter, J.).) “[O]n

this record,” he concluded, “we must resolve that conflict in favor

of the Legislature.” (Ibid.)

Plaintiffs petitioned for our review. We granted the

petition and later limited the issue to be argued and briefed as

follows: “Does Business and Professions Code section 7451,

which was enacted by Proposition 22 (the ‘Protect App-Based

Drivers and Services Act’), conflict with article XIV, section 4 of

the California Constitution and therefore require that

Proposition 22, by its own terms, be deemed invalid in its

entirety?”

II.

In addressing this question, we begin by examining

whether the Legislature’s plenary power under article XIV,

section 4 to legislate on workers’ compensation is exclusive, or

whether the people through the initiative power may also

legislate on matters affecting workers’ compensation by

enacting section 7451.

A.

Plaintiffs assert that the phrase “unlimited by any

provision of this Constitution” (the “unlimited” clause) in article

XIV, section 4 prohibits the initiative statute here. According to

plaintiffs, if “an initiative statute can remove entire classes of

workers from the complete workers’ compensation system

established by the Legislature . . . then the Legislature’s plenary

power is not ‘unlimited.’ ” They ask us to invalidate section 7451

on that basis.

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Our analysis is guided by McPherson, supra, 38 Cal.4th

1020, where we examined the only other provision of the

California Constitution that expressly references the

Legislature’s plenary power, unlimited by any other

constitutional provision, to take a specified action. That

provision is article XII, section 5, which states: “The Legislature

has plenary power, unlimited by the other provisions of this

constitution but consistent with this article, to confer additional

authority and jurisdiction upon the [Public Utilities

Commission] . . . .” We held that article XII, section 5 does not

“preclude[] the use of the initiative process to enact statutes

conferring additional authority upon the [commission].”

(McPherson, at p. 1025.) In other words, the Legislature’s power

under article XII, section 5 is not exclusive of the people’s

initiative power, notwithstanding the “unlimited” clause.

As McPherson observed, the initiative power is recognized

in article IV, section 1 of the California Constitution, which

states: “The legislative power of this State is vested in the

California Legislature which consists of the Senate and

Assembly, but the people reserve to themselves the powers of

initiative and referendum.” We summarized the history of this

provision as follows: “ ‘The amendment of the California

Constitution in 1911 to provide for the initiative and

referendum signifies one of the outstanding achievements of the

progressive movement of the early 1900’s. Drafted in light of

the theory that all power of government ultimately resides in

the people, the amendment speaks of the initiative and

referendum, not as a right granted the people, but as a power

reserved by them. Declaring it “the duty of the courts to

jealously guard the right of the people” [citation], the courts

have described the initiative and referendum as articulating

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“one of the most precious rights of our democratic process”

[citation]. “[I]t has long been our judicial policy to apply a liberal

construction to this power whenever it is challenged in order

that the right be not improperly annulled. If doubts can

reasonably be resolved in favor of the use of this reserve power,

courts will preserve it.” ’ ” (McPherson, supra, 38 Cal.4th at

p. 1032, quoting Associated Home Builders of the Greater

Eastbay, Inc. v. City of Livermore (1976) 18 Cal.3d 582, 591

(Associated Home Builders).)

Mindful of these principles, this court in McPherson

rejected the view that article XII, section 5 conferred exclusive

power on the Legislature to expand the Public Utilities

Commission’s (PUC) authority or jurisdiction. (McPherson,

supra, 38 Cal.4th at p. 1032.) Proponents of the initiative

statute there argued that the phrase “ ‘unlimited by the other

provisions of this constitution’ ” in article XII, section 5 could not

be read literally because doing so “logically would signify that a

statute passed by the Legislature pursuant to article XII, section

5 would not be subject to any provision of the California

Constitution, including, for example, the provision authorizing

the Governor to veto a bill approved by the Legislature. (Cal.

Const., art. IV, § 10.)” (McPherson, at p. 1036.) We agreed that

the “unlimited” clause was “not unambiguous” and could not

“reasonably be interpreted only as having the effect of

precluding the people’s exercise of their reserved initiative

power.” (Ibid.) We then consulted the background of article XII,

section 5 and observed that it was approved at the same 1911

election where voters also approved article IV, section 1

establishing the initiative power. (McPherson, at pp. 1040–

1041.) Given this timing, we found it “most improbable” that

the voters intended, “without any direct or explicit statement to

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this effect, to limit the use of the initiative power” through

article XII, section 5. (McPherson, at p. 1042.)

Relying on McPherson, the Court of Appeal reasoned that

“article XIV, section 4’s ‘unlimited’ clause cannot mean that

workers’ compensation laws are exempt from every other aspect

of the Constitution” and that “it is ambiguous as to which

aspects of the Constitution continue to apply and which do not.”

(Castellanos, supra, 89 Cal.App.5th at p. 150.) Although

Proposition 22 differs in some respects from the initiative

statute at issue in McPherson, we agree with the Court of

Appeal that McPherson is instructive when interpreting the

“nearly identical” “unlimited” clause of article XIV, section 4.

(Castellanos, at p. 150.)

Plaintiffs attempt to distinguish article XIV, section 4’s

“unlimited” clause from the provision at issue in McPherson on

several grounds. First, plaintiffs point out that unlike article

XII, section 5, which was enacted the same year as the initiative

power, the “unlimited” clause was added to article XIV, section

4 in 1918, seven years after the initiative power was added to

the Constitution in 1911. In light of this chronology, plaintiffs

contend the “unlimited” clause of article XIV, section 4

“necessarily encompassed” the existing initiative power. But

this timing does not resolve article XIV, section 4’s ambiguity

because it provides no basis to single out the initiative power

from other constitutional checks on the Legislature’s power such

as the Governor’s veto power. In any event, we agree with the

Court of Appeal that it seems “ ‘most improbable’ that the voters

in 1918 — seven years after they ‘approved a far-reaching

measure incorporating a broad initiative power as part of the

California Constitution’ — would have intended, ‘without any

direct or explicit statement to this effect, to limit the use of the

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initiative power by virtue of the language’ in article XIV, section

4.” (Castellanos, supra, 89 Cal.App.5th at pp. 151–152, quoting

McPherson, supra, 38 Cal.4th at p. 1042.)

Plaintiffs respond that “[e]ven if the 1918 voters did not

have the initiative power in mind,” the “broad and

comprehensive” language of the “unlimited” clause supports

their view that the clause limits the initiative power. But even

plaintiffs do not endorse a literal reading of the “unlimited”

clause such that the Legislature would be entirely free of

constitutional checks or constraints in the area of workers’

compensation. The clause requires interpretation, and without

a specific indication that the 1918 voters who enacted the clause

meant to limit the initiative power, it is “ ‘our judicial policy to

apply a liberal construction to this power wherever it is

challenged in order that the right be not improperly annulled.’ ”

(Associated Home Builders, supra, 18 Cal.3d at p. 591.)

Next, plaintiffs assert that the “unlimited” clause here is

not ambiguous because article XIV, section 4 directs the

Legislature to enact “appropriate legislation” to administer the

workers’ compensation system. They contend that “the

potential ambiguity about the veto power in McPherson arose

only because the constitutional provision at issue there did not

specify how the Legislature could exercise its ‘unlimited’

authority.” Because “[l]egislation is adopted only when a bill is

‘bicamerally enacted and presented to the head of the executive

branch for approval or veto,’ ” plaintiffs argue, the phrase

“appropriate legislation” makes clear that article XIV, section

4’s “unlimited” clause applies only to the initiative power and

not to other constitutional checks on the legislative power.

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Like the Court of Appeal, we believe the phrase “by

appropriate legislation” in article XIV, section 4 “does not

change the analysis.” (Castellanos, supra, 89 Cal.App.5th at

p. 153.) It seems unlikely that the term “appropriate” was

intended to mean that a bill has been bicamerally enacted and

presented to the Governor. “Without following those

procedures, no bill the Legislature passes is binding on anyone.

It is not law at all . . . .” (Id. at p. 193 (conc. & dis. opn. of

Streeter, J.).) Thus, if the authors of article XIV, section 4 had

intended to specify that workers’ compensation statutes must

comply with constitutional checks on legislative power, they

could have simply used the word “legislation,” and the

additional word “appropriate” would be surplusage. Moreover,

plaintiffs’ definition of “appropriate legislation” as legislation

that has been bicamerally enacted and presented to the

Governor does not account for legislation that amends an

initiative statute and must be approved by the voters under

article II, section 10(c). In other words, under our state

Constitution, just as “legislation” ordinarily means a bill that

has been presented to the Governor, “legislation” amending an

initiative statute is a bill that has been approved by the voters

unless the initiative provides otherwise. Plaintiffs’ definition

still requires us to “choos[e] which constitutional provisions

would apply and which would not. It is not clear why the veto

power and the initiative power would fall on different sides of

that line.” (Castellanos, at p. 153.)

In sum, guided by McPherson’s reasoning, we conclude

that the “unlimited” clause is ambiguous and that there is no

textual or historical basis to construe it to apply solely to the

initiative power.

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B.

To discern the meaning of the “unlimited” clause, the

Court of Appeal consulted the ballot materials from the 1918

election at which an amendment to former article XX, section 21

added the “unlimited” clause and enacted what is now article

XIV, section 4. In those materials, the Court of Appeal found no

evidence that the “voters intended to free the Legislature [from

the initiative power] when enacting workers’ compensation

laws.” (Castellanos, supra, 89 Cal.App.5th at p. 151.) The court

agreed with our determination in Mathews v. Workmen’s

Compensation Appeals Board (1972) 6 Cal.3d 719, 734–735

(Mathews) that the 1918 amendment served “ ‘the sole purpose

of removing all doubts as to the constitutionality of the then

existing workmen’s compensation statutes.’ ” (Castellanos, at

p. 151; see Mathews, at p. 732, fn. 9.)

A review of the historical background of the 1918

amendment confirms our conclusion in Mathews. In 1911, the

Roseberry Act (Stats. 1911, ch. 399, § 1, p. 796) established a

voluntary system of workers’ compensation. (Mathews, supra,

6 Cal.3d at p. 729.) One month later, the voters approved article

XX, section 21 (now article XIV, § 4), which provided in relevant

part, “ ‘The Legislature may by appropriate legislation create

and enforce a liability on the part of all employers to compensate

their employees for any injury incurred by the said employees in

the course of their employment irrespective of the fault of either

party.’ ” (Mathews, at p. 730, italics omitted, quoting former art.

XX, § 21.) “Because few employers had chosen coverage under

the voluntary plan established by the Roseberry Act, in 1913 the

Legislature exercised the power conferred upon it by section 21

of article XX and enacted a compulsory scheme of workmen’s

compensation” through what was popularly known as the

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Boynton Act (Stats. 1913, ch. 176, § 1, p. 279). (Mathews, at

p. 730.) The Boynton Act “substitute[d] a new system of rights

and obligations for the common-law rules governing the liability

of employers for injuries to their workmen. . . . In place of the

old action, in which the employer was liable only if he, or some

one representing him, had been guilty of negligence or

misconduct, the new law impose[d] upon the employer a liability

for any accidental injuries to his employees arising out of the

employment . . . .” (Western Indemnity, supra, 170 Cal. at

p. 692.)

Between 1913 and 1918, the Boynton Act was challenged

on multiple constitutional grounds. (See, e.g., Western

Indemnity, supra, 170 Cal. 686; Western Metal Supply Co. v.

Pillsbury (1916) 172 Cal. 407.) In Western Indemnity, we

characterized the Boynton Act as “radical” but held that it did

not violate the California Constitution or the Fourteenth

Amendment to the United States Constitution. (Western

Indemnity, at p. 692, see id. at p. 701.) Justice Henshaw

disagreed, describing the Boynton Act as “obnoxious to the

constitutional provisions guaranteeing equal protection, and

forbidding confiscation,” and predicting that the United States

Supreme Court would grant review of our decision. (Western

Indemnity, at p. 716 (dis. opn. of Henshaw, J.); see id. at p. 721

(dis. opn. of Henshaw, J.).) Justice Shaw agreed with Justice

Henshaw that, under some circumstances, application of the

Boynton Act “would be a taking for a public purpose without

lawful excuse or right and without compensation.” (Western

Indemnity, at p. 735 (conc. opn. dubitante of Shaw, J., on rehg.

den.).) Together, Justice Henshaw and Justice Shaw “cast doubt

on whether former article XX, section 21, provided adequate

support for the Boynton Act as a matter of state law.”

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(Castellanos, supra, 89 Cal.App.5th at p. 184 (conc. & dis. opn.

of Streeter, J.).)

In 1918, the electorate was presented with an amendment

to article XX, section 21 to address those doubts. The ballot

materials explained that “ ‘[t]he proposed amendment [wa]s

designed to express full authority for legislation; to sanction,

establish and protect the full plan in all essentials where the

courts ha[d] not already passed upon it.’ ” (Mathews, supra, 6

Cal.3d at p. 733, fn. 11, italics omitted.) The ballot materials

also called the amendment “ ‘a necessary amplification and

definition of the constitutional authority vested in the

legislature by the amendment to the Constitution adopted

October 10, 1911, to enable the enactment of a complete plan of

workmen’s compensation . . . .’ ” (Ibid.) The materials further

stated, “Our workmen’s compensation act . . . should be put

upon a firm constitutional basis, beyond the possibility of being

attacked on technical grounds or by reason of any questioned

want of constitutional authority.” (Ballot Pamp., General Elec.

(Nov. 5, 1918) argument in favor of Senate Constitutional

Amendment No. 30, p. 56.) As Mathews explained, this history

demonstrates the voters’ intent to confirm “the constitutionality

of the then existing workmen’s compensation statutes.”

(Mathews, at pp. 734–735.)

In light of this purpose, Mathews rejected a claim that the

1918 amendment invalidated one of the “basic features” of

existing workers’ compensation laws (Mathews, supra, 6 Cal.3d

at p. 735) — “conditioning the right to compensation upon the

absence of wilful misconduct or other intentional wrongdoing”

(id. at pp. 724–725). According to Justice Streeter, Mathews’s

preservation of this “basic feature” of the workers’ compensation

system suggests that “there is a minimum constitutional

17

CASTELLANOS v. STATE OF CALIFORNIA

Opinion of the Court by Liu, J.

baseline to our workers’ compensation system no statute can go

below” and that Proposition 22 falls below that baseline.

(Castellanos, supra, 89 Cal.App.5th at p. 181 (conc. & dis. opn.

of Streeter, J.).) But this misconstrues Mathews. As the Court

of Appeal explained, “[t]he point of Mathews was only that

article XIV, section 4 was intended to authorize the workers’

compensation system that already existed — not that those

features became sacrosanct and untouchable by either the

Legislature or the electorate.” (Castellanos, at p. 151, fn. 8.)

Like Justice Streeter, plaintiffs assert that the 1918

workers’ compensation system “contained the basic elements

necessary to protect workers and their families” and that

Proposition 22 “lacks those basic elements,” thereby

“frustrat[ing] the social public policy” declared by article XIV,

section 4. But we agree with interveners that “the ‘social public

policy’ language [of article XIV, section 4] does not impose a

substantive requirement that the workers’ compensation

system cover any particular group of workers.” Article XIV,

section 4’s declaration that a complete system of workers’

compensation is the “social public policy of the State” does not

alter the extent of what we held in Mathews.

In sum, the history of the 1918 amendment that codified,

in all material respects, the present version of article XIV,

section 4 demonstrates that the amendment was a response to

constitutional challenges to the existing workers’ compensation

system. It does not show that the amendment was meant to

limit the initiative power in any respect.

C.

Plaintiffs further contend that McPherson is inapposite

because of an express limitation in that decision. As noted,

18

CASTELLANOS v. STATE OF CALIFORNIA

Opinion of the Court by Liu, J.

McPherson held that the Legislature’s article XII, section 5

power does not invalidate an initiative statute conferring

additional authority upon the PUC. (McPherson, supra, 38

Cal.4th at p. 1025.) But we said we “ha[d] no occasion” “to

consider whether an initiative measure relating to the PUC may

be challenged on the ground that it improperly limits the PUC’s

authority or improperly conflicts with the Legislature’s exercise

of its authority to expand the PUC’s jurisdiction or authority.”

(Id. at p. 1044, fn. 9.) Plaintiffs assert that this case presents a

situation not addressed by McPherson because “the Legislature

exercised its authority when it enacted [Assembly Bill 5], and

section 7451 conflicts with that exercise of authority.” They also

argue that section 7451 “restrains the Legislature from

exercising its plenary power to provide a complete system of

workers’ compensation.”

We agree that section 7451 contradicts Assembly Bill 5’s

classification of app-based drivers as employees and that

McPherson did not address such a conflict. But in light of our

conclusion that the article XIV, section 4 power is not exclusive,

it would unduly restrict the initiative power to give the

Legislature what would essentially be a first-mover advantage,

precluding the electorate from undoing any action the

Legislature takes pursuant to article XIV, section 4. The power

of initiative includes “the power to abrogate existing [laws].”

(California Redevelopment Assn. v. Matosantos (2011) 53

Cal.4th 231, 255.) Accordingly, the people may alter existing

workers’ compensation policy without running afoul of article

XIV, section 4. We express no view on the outer bounds of that

authority or whether article XIV, section 4 might place limits on

it.

19

CASTELLANOS v. STATE OF CALIFORNIA

Opinion of the Court by Liu, J.

As for plaintiffs’ further concern that section 7451

improperly limits the Legislature’s ability to enact future

workers’ compensation laws, we agree with the Attorney

General that section 7451 does not, by its terms, limit the

Legislature’s power to enact workers’ compensation laws.

Section 7451 operates to classify app-based drivers as

independent contractors instead of employees when certain

criteria are met. Against the backdrop of existing law, this

classification renders app-based drivers ineligible for workers’

compensation because eligibility generally depends on the

existence of an employment relationship. (Lab. Code, § 3600,

subd. (a).) But section 7451 itself says nothing about workers’

compensation, and the Legislature has made a number of

exceptions to the general eligibility rule in order to extend

workers’ compensation to nonemployees. (See, e.g., Lab. Code,

§§ 3360 [providing conditions under which “[w]orkmen

associating themselves under a partnership agreement, the

principal purpose of which is the performance of the labor on a

particular piece of work,” may be treated as employees for

purposes of workers’ compensation], 3363.6, subd. (a) [providing

similar conditions for “a person who performs voluntary service

without pay for a private, nonprofit organization”], 3364 [setting

forth similar conditions for “volunteer, unsalaried member[s] of

a sheriff’s reserve”].) In making these exceptions, the

Legislature has asserted that it is empowered by article XIV,

section 4. (See Lab. Code, § 3201 [“This division and Division 5

(commencing with Section 6300) . . . are intended to make

effective and apply to a complete system of workers’

compensation the provisions of Section 4 of Article XIV of the

California Constitution.”].)

20

CASTELLANOS v. STATE OF CALIFORNIA

Opinion of the Court by Liu, J.

Plaintiffs acknowledge that “[a]n initiative statute that

did not prevent the Legislature from providing app-based

drivers with a complete system of workers’ compensation could

be harmonized with article XIV.” But they argue that such

action by the Legislature would be stymied by section 7465’s

directives that the Legislature may only amend the initiative by

passing a statute (with a seven-eighths majority vote) that “is

consistent with, and furthers the purpose of, this chapter,” and

that “[a]ny statute that amends Section 7451 does not further

purposes of this chapter.” (§ 7465, subds. (a), (c)(2).) As

plaintiffs put it, “future legislation providing workers’

compensation benefits to app-based drivers . . . would constitute

an impermissible amendment of section 7451.” What this

means, according to plaintiffs, is that any act by the Legislature

to restore workers’ compensation eligibility to app-based drivers

would require voter approval because article II, section 10(c)

prohibits the Legislature from amending an initiative statute

without voter approval unless the initiative provides otherwise.

The Attorney General responds that “[i]t would be

premature to address any questions about the Legislature’s

power to enact future legislation that defines app-based drivers

as workers entitled to workers’ compensation” because we

cannot “predict what shape such legislation might take and

what the relevant constitutional analysis would be in assessing

its validity.” We agree. Without any specific legislation before

us, we have no occasion to decide whether a statute providing

app-based drivers workers’ compensation would necessarily

constitute a statute that “amends Section 7451” (§ 7465,

subd. (c)(2)) and triggers the voter approval requirement of

article II, section 10(c). We leave open whether a future statute

that changes the consequences of section 7451 in a discrete area

21

CASTELLANOS v. STATE OF CALIFORNIA

Opinion of the Court by Liu, J.

would properly be characterized as an amendment of section

7451. (Cf., e.g., People v. Rojas (2023) 15 Cal.5th 561, 568;

People v. Kelly (2010) 47 Cal.4th 1008, 1025–1026; People v.

Cooper (2002) 27 Cal.4th 38, 44.)

Under section 7465, the Legislature may amend

provisions of Proposition 22 other than section 7451 as long as

such an amendment “is consistent with, and furthers the

purpose of, this chapter” and obtains a seven-eighths majority

vote in each house of the Legislature. (§ 7465, subd. (a).)

Plaintiffs and the Attorney General contend that section 7465’s

supermajority requirement may conflict with article XIV,

section 4 under our reasoning in County of Los Angeles v. State

(1987) 43 Cal.3d 46 (County of Los Angeles). In County of Los

Angeles, we addressed a potential conflict between article XIV,

section 4 and article XIII B, section 6. Under the latter

provision, “[w]henever the Legislature or any state agency

mandates a new program or higher level of service on any local

government,” the state must reimburse the local government for

costs incurred as a result of the mandate. (Art. XIII B, § 6,

subd. (a).) The question was whether legislation that increased

workers’ compensation benefits for local government employees

was subject to article XIII B, section 6. If so, then the legislation

would have been subject to a supermajority vote under article

IV, section 12. (See County of Los Angeles, at p. 57; art. IV, § 12,

subd. (d) [“Appropriations from the General Fund of the State

. . . are void unless passed in each house by rollcall vote entered

in the journal, two-thirds of the membership concurring.”].)

We explained that “[o]ur concern over potential conflict

arises because article XIV, section 4, gives the Legislature

‘plenary power, unlimited by any provision of this Constitution’

over workers’ compensation.” (County of Los Angeles, supra, 43

22

CASTELLANOS v. STATE OF CALIFORNIA

Opinion of the Court by Liu, J.

Cal.3d at pp. 58–59, fn. omitted.) “A constitutional requirement

that [workers’ compensation] legislation either exclude

employees of local governmental agencies or be adopted by a

supermajority vote” would “curtail the power of a majority to

enact substantive changes by any procedural means.” (Id. at

p. 60.) Because such an interpretation of article XIII B,

section 6 “would have an indirect, but substantial impact on the

ability of the Legislature to make future changes in the existing

workers’ compensation scheme,” we construed article XIII B,

section 6 to avoid that result. (County of Los Angeles, at p. 59.)

Plaintiffs observe that section 7465, unlike article XIII B,

section 6, is part of an initiative statute that is “subordinate to

the Constitution.” They argue that any “limitation on the

Legislature’s power to increase workers’ compensation

benefits,” including section 7465, “would conflict with article

XIV.” And the Attorney General acknowledges that the seven-

eighths majority requirement of section 7465 “may be

constitutionally problematic” in light of County of Los Angeles.

But interveners said during oral argument that County of Los

Angeles is “readily distinguishable,” in part because it did not

actually resolve any conflict between constitutional provisions

since the two provisions at issue could be harmonized.

We have no need in this case to decide the applicability of

our reasoning in County of Los Angeles to Proposition 22 or to

determine the extent to which article XIV, section 4 may limit

the initiative power. We reserve these issues until we are

presented with an actual challenge to an act of the Legislature

providing workers’ compensation to app-based drivers. To

resolve the question presented, it suffices to conclude that

section 7451 does not itself restrict the Legislature’s authority

23

CASTELLANOS v. STATE OF CALIFORNIA

Opinion of the Court by Liu, J.

to enact workers’ compensation legislation or otherwise conflict

with article XIV, section 4.

Plaintiffs assert in their reply and answer to amicus

curiae briefs that the Legislature has already extended workers’

compensation benefits to app-based drivers through Assembly

Bill No. 1766 (2023–2024 Reg. Sess.) (Assembly Bill 1766),

which was enacted after Proposition 22. (Stats. 2023, ch. 133.)

They point to a provision of Assembly Bill 1766 that

prospectively revised the definition of “employee” in Labor Code

section 3351, subdivision (i) to include “any individual who is an

employee pursuant to section 2775.” They say that by

“updat[ing] an obsolete cross-reference” in this provision, the

Legislature “reaffirm[ed] that ‘any individual who is an

employee pursuant to [Labor Code] Section 2775’ (which codifies

the ABC test) is covered by the workers’ compensation system.

(Stats. 2023, ch. 133, § 1 (Assem. Bill No. 1766), effective Jan. 1,

2024.)” But plaintiffs do not cite any authority for their claim

that this updated cross-reference effectively recodifies the ABC

test for app-based drivers, nor do they demonstrate that their

theory has ever been tested in litigation. At this juncture, it is

not clear that “there is already a direct and irreconcilable

conflict between section 7451 and a statute adopted by the

Legislature after Proposition 22 was enacted,” as plaintiffs

contend. In any event, that question is not before us, and we

express no view on it.

24

CASTELLANOS v. STATE OF CALIFORNIA

Opinion of the Court by Liu, J.

CONCLUSION

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.

LIU, J.

We Concur:

GUERRERO, C. J.

CORRIGAN, J.

KRUGER, J.

GROBAN, J.

JENKINS, J.

EVANS, J.

25

See next page for addresses and telephone numbers for counsel who

argued in Supreme Court.

Name of Opinion Castellanos v. State of California

__________________________________________________________

Procedural Posture (see XX below)

Original Appeal

Original Proceeding

Review Granted (published) XX 89 Cal.App.5th 131

Review Granted (unpublished)

Rehearing Granted

__________________________________________________________

Opinion No. S279622

Date Filed: July 25, 2024

__________________________________________________________

Court: Superior

County: Alameda

Judge: Frank Roesch

__________________________________________________________

Counsel:

Rob Bonta, Attorney General, Michael J. Mongan, State Solicitor

General, Thomas S. Patterson, Assistant Attorney General, Samuel T.

Harbourt, Deputy State Solicitor General, Mark R. Beckington, Jose A.

Zelidon-Zepeda and Lara Haddad, Deputy Attorneys General, and

Cara M. Newlon, Associate Deputy State Solicitor General, for

Defendants and Appellants.

DLA Piper, Stanley J. Panikowski and Justin R. Sarno for former

Attorney General Daniel E. Lungren as Amicus Curiae on behalf of

Defendants and Appellants.

DLA Piper and Stanley J. Panikowski for former California

Assemblyman William R. Berryhill as Amicus Curiae on behalf of

Defendants and Appellants.

Eimer Stahl and Robert E. Dunn for Crum & Forster Holding Co. as

Amicus Curiae on behalf of Defendants and Appellants.

California Constitution Center, University of California, Berkeley,

David A. Carrillo; Benbrook Law Group and Stephen M. Duvernay for

California Constitution Scholars as Amici Curiae on behalf of

Defendants and Appellants.

Holland & Knight, Stacey Wang, Amit Agarwal and Keiana Wilkerson

for former State Senators Robert Timothy Leslie and James Stephen

Peace as Amici Curiae on behalf of Defendants and Appellants.

O’Melveny & Myers, Jeffery L. Fisher; Nielsen Merksamer Parrinello

Gross & Leoni, Arthur G. Scotland, Sean P. Welch, Kurt R. Oneto and

David J. Lazarus for Interveners and Appellants.

Eimer Stahl, Robert E. Dunn and Collin J. Vierra for Citizens in

Charge as Amicus Curiae on behalf of Defendants and Appellants and

Interveners and Appellants.

Allen Matkins Leck Gamble Mallory & Natsis, Marshall C. Wallace,

Alexander J. Doherty and Kimberly F. Macey for Citizens in Charge

and The Initiative and Referendum Institute at the University of

Southern California as Amici Curiae on behalf of Defendants and

Appellants and Interveners and Appellants.

Davis Wright Tremaine, Rochelle L. Wilcox and Alexa A. Graumlich

for California Chamber of Commerce as Amicus Curiae on behalf of

Defendants and Appellants and Interveners and Appellants.

Davis Wright Tremaine, Adam S. Sieff, Annie Zhang and David M.

Gossett for Chamber of Progress, NetChoice, Asian Industry B2B, the

Silicon Valley Leadership Group and sf.citi as Amici Curiae on behalf

of Defendants and Appellants and Interveners and Appellants.

Holtzman Vogel Baran Torchinsky Josefiak, Alex Vogel, Edward M.

Wenger and Andrew Pardue for California Policy Center as Amicus

Curiae on behalf of Defendants and Appellants and Interveners and

Appellants.

Willenken, Kenneth M. Trujillo-Jamison and Michelle K. Millard for

California Asian Pacific Chamber of Commerce, NAACP California

Hawaii State Conference, California Hispanic Chambers of Commerce,

Los Angeles Metropolitan Churches, National Action Network Los

Angeles, National Action Network Sacramento Chapter Inc., National

Asian American Coalition and National Diversity Coalition as Amici

Curiae on behalf of Defendants and Appellants and Interveners and

Appellants.

Jenner & Block, Laurie J. Edelstein and Adam G. Unikowsky for

Chamber of Commerce of the United States of America as Amicus

Curiae on behalf of Defendants and Appellants and Interveners and

Appellants.

Baker Botts and Michael W. Ward for Arnold Schwarzenegger as

Amicus Curiae on behalf of Defendants and Appellants and

Interveners and Appellants.

King & Spalding, Albert Giang, Jeffery Hammer, Anne M. Voigts and

Ramon A. Miyar for Marketplace Industry Association, Inc., as Amicus

Curiae on behalf of Defendants and Appellants and Interveners and

Appellants.

Buchalter, Steven G. Churchwell, Berit Elam and Brandon Q. Tran for

Daniel Schnur, T. Anthony Quinn and Robert M. Stern as Amici

Curiae on behalf of Defendants and Appellants and Interveners and

Appellants.

Weintraub Tobin Chediak Coleman Grodin and Brendan J. Begley for

Independent Drivers Alliance of California, Kelly Rickert, Ali Mazhin

and Stephanie Whitfield as Amici Curiae on behalf of Defendants and

Appellants and Interveners and Appellants.

Wilmer Cutler Pickering Hale and Dorr, Kelly P. Dunbar, Samuel M.

Strongin, Joshua H. Lerner and Michael A. Mugmon for the California

Chamber of Commerce as Amicus Curiae on behalf of Defendants and

Appellants and Interveners and Appellants.

Keiter Appellate Law and Mitchell Keiter for Amicus Populi as Amicus

Curiae on behalf of Defendants and Appellants and Interveners and

Appellants.

Mayer Brown and Archis A. Parasharami for David R. Henderson,

Keith Chen, Jeffrey R. Hummel, Ethan Ligon, Michael Marlow, Lee E.

Ohanian, Damian Park, Valerie Ramey, Abbylin H. Sellers, William F.

Shughart II, Brian P. Simpson and Robert S. Taylor as Amici Curiae

on behalf of Defendants and Appellants and Interveners and

Appellants.

Jonathan M. Coupal, Timothy A. Bittle, Laura E. Dougherty and Amy

C. Sparrow for Howard Jarvis Taxpayers Association as Amicus Curiae

on behalf of Interveners and Appellants.

Olson Remcho, Robin B. Johansen, Richard R. Rios, Deborah B.

Caplan, Benjamin N. Gevercer; Altshuler Berzon, Stephen P. Berzon,

Scott A. Kronland, Stacey M. Leyton, Juhyung Harold Lee, Robin

Tholin; Service Employees International Union, Nicole G. Berner,

Steven K. Ury and Claire Presetel for Plaintiffs and Respondents.

Richard L. Hasen; Public Counsel, Mark D. Rosenbaum and Kathryn

Eidmann for California Election Law Professors as Amici Curiae on

behalf of Plaintiffs and Respondents.

Hina B. Shah; Benjamin Beach; Nayantara Mehta and Brian Chen for

Gig Workers Rising, Mobile Workers Alliance, Rideshare Drivers

United—California, We Drive Progress, A Better Balance, ACCE

Institute, Action Center on Race & the Economy, Asian Americans

Advancing Justice—Los Angeles, Bet Tzedek, California Employment

Lawyers Association, California Immigrant Policy Center, Centro

Legal de la Raza, Chinese Progressive Association, Economic Policy

Institute, Jobs With Justice Education Fund and Jobs With Justice

San Francisco, Lawyers Committee for Civil Rights of the San

Francisco Bay Area, Legal Aid at Work, Los Angeles Black Worker

Center, Maintenance Cooperation Trust Fund, National Black Worker

Center, National Council for Occupational Safety and Health, National

Domestic Workers Alliance, National Employment Law Project,

Pilipino Workers Center, PowerSwitch Action, Public Rights Project,

Santa Clara County Wage Theft Coalition, Women’s Employment

Rights Clinic of Golden Gate University School of Law and Worksafe

as Amici Curiae on behalf of Plaintiffs and Respondents.

Weinberg, Roger & Rosenfeld, David A. Rosenfeld; Daniel Ocampo,

Sally Dworak-Fisher, Laura Padin and Catherine Ruckelshaus for the

National Employment Law Project, California Labor Federation,

Rideshare Drivers United, Gig Workers Rising, Asian Americans

Advancing Justice – Asian Law Caucus, Asian Americans Advancing

Justice Southern California, PowerSwitch Action, Worksafe, Action

Center on Race & the Economy, the Economic Policy Institute, Bet

Tzedek and the California Immigrant Policy Center as Amici Curiae on

behalf of Plaintiffs and Respondents.

Bush Gottlieb, Julie Gutman Dickinson, Hector De Haro and Luke

Taylor for International Brotherhood of Teamsters, Local 396,

International Brotherhood of Teamsters, Local 542, International

Brotherhood of Teamsters, Local 848, and the Los Angeles County

Federation of Labor, AFL-CIO, as Amici Curiae on behalf of Plaintiffs

and Respondents.

David Chiu, City Attorney (San Francisco), Yvonne R. Meré, Chief

Deputy City Attorney, Sara J. Eisenberg, Matthew D. Goldberg, Ian

Eliasoph and Molly J. Alarcon, Deputy City Attorneys, Barbara J.

Parker, City Attorney (Oakland), Maria Bee, Chief Assistant City

Attorney, Zoe Savitsky and Divya Musinipally, Deputy City Attorneys,

Katherine Read, Fellowship Attorney, Michael N. Feuer, City Attorney

(Los Angeles), Kathleen Kenealy, Chief Assistant City Attorney,

Michael J. Bostrom, Assistant City Attorney, Mara W. Elliott, City

Attorney (San Diego), Mark Ankcorn, Chief Deputy City Attorney, Eric

Laguardia, Kevin King and Julie Rau, Deputy City Attorneys, Tony

Lopresti, County Counsel (Santa Clara), Kavita Narayan, Meredith A.

Johnson and Raphael N. Rajendra, Deputy County Counsel, for the

City and County of San Francisco, the Cities of Oakland and San

Diego, and the County of Santa Clara, as Amici Curiae on behalf of

Plaintiffs and Respondents.

Eric M. Overholt and Andrew W. Lockard for California Applicants’

Attorneys Association as Amicus Curiae on behalf of Plaintiffs and

Respondents.

Veena Dubal for Catherine L. Fisk, Sameer Ashar, Veena Dubal,

Charlotte Garden, Joseph Grodin, William B. Gould IV, Stephen Lee,

Sanjukta Paul, Leticia Saucedo, Reuel Schiller, Katherine Stone and

Noah D. Zatz as Amici Curiae on behalf of Plaintiffs and Respondents.

Cara L. Jenkins, Stephen Dehrer and Benjamin Herzberger for State

Senator Dave Cortese and State Assembly Member Liz Ortega as

Amici Curiae on behalf of Plaintiffs and Respondents.

Counsel who argued in Supreme Court (not intended for

publication with opinion):

Jeffrey L. Fisher

O’Melveny & Meyers LLP

2765 Sand Hill Road

Menlo Park, CA 94025

(650) 473-2633

Michael J. Mongan

State Solicitor General

455 Golden Gate Avenue, Suite 11000

San Francisco, CA 94102-7004

(415) 510-3920

Scott A. Kronland

Altshuler Berzon LLP

177 Post Street, #300

San Francisco, CA 94108

(415) 421-7151