From JDSupra, Mellissa Schafer, as part of her year in review, discusses the AB 1340, the Transportation Network Company Drivers Labor Relations Act, which creates a way for some independent contractor gig drivers to organize and collectively bargain. Melissa writes:
The end of something is always the beginning of something else. That always rings true for years’ end and new employment laws. It is time, once again, for all employers to sit down, buckle up, and get ready for the 2026 California employment law updates and changes.
As usual, more than a dozen new employment laws have been passed. Workplace violence and safety, discrimination, and paid leave laws remain at the top of the list as we enter 2026, with AI and data privacy also moving up the list. Before we pop the champagne and say goodbye to 2025, it is time to reprise our annual review of key California labor and employment law developments.
In the spirit of the season, we are kicking off our annual “12 Days of the Holidays” blog series to address new California laws and their impact on employers. For the next several weeks, we will provide updates on this page. We encourage employers to bookmark this page and watch for announcements on our social media channels and email updates to our subscribers.
Day 11: Labor Relations for Gig Drivers
On the eleventh day of the holidays, my labor and employment attorney gave to me eleven pipers piping and AB 1340.
AB 1340 takes effect as of January 1, 2026, and establishes a path for qualified gig drivers, who are classified as independent contractors, to organize and collectively bargain. It is known as the Transportation Network Company Drivers Labor Relations Act.
Background
AB 5
- AB 5 went into effect as of January 1, 2020. The law made it more difficult for employers to classify workers as independent contractors and was aimed at protecting gig economy workers by requiring the “ABC test” for employment status.
- There were numerous industry exemptions outlined in AB 5, with more exemptions added over the years. However, gig drivers were not one of them. The failure to provide gig drivers an exemption under AB 5 carried over to the 2020 statewide general election with Proposition 22.
Proposition 22
- Proposition 22, also known as the Protect App-Based Drivers and Services Act, was approved by voters on November 3, 2020, in the statewide general election, holding that app-based drivers for network companies, as defined, are independent contractors if certain conditions are met.
- Proposition 22 also required that network companies provide a healthcare subsidy to qualifying app-based drivers, provide a minimum level of compensation for app-based drivers, and not restrict app-based drivers from working in any other lawful occupation or business.
- Certain provisions were deemed invalid based on separation of powers grounds and invalidated per case law. However, the court severed the unconstitutional provisions, allowing the rest of the initiative to remain in effect.
What Does AB 1340 Do?
AB 1340 contains numerous provisions relating to what additional rights gig drivers have as of January 1, 2026, including:
- The right to form, join, and participate in driver organizations;
- The right to bargain collectively through representatives of their own choosing with Transportation Network Companies (TNCs);
- Having a state-run framework for union elections, certification, and dispute resolution;
- Requirement that TNCs must negotiate in good faith with certified driver unions; and
- Procedures for mediation and arbitration when negotiations stall.
AB 1340 further mandates that the Public Employment Relations Board serve as the governing board for AB 1340 to address issues involving overseeing union certification, elections, and unfair practice claims.
Despite the new rights allowed to gig drivers, AB 1340 does not alter their status as independent contractors under Proposition 22. Gig drivers remain classified as independent contractors.
Who Does AB 1340 Cover?
Not everyone who drives for a transportation network company will be considered an active TNC driver. AB 1340 provides the following relevant definitions:
- “Active TNC driver” means a transportation network company (TNC) driver who has driven at least the minimum number of rides during the past six months (20 rides) with a covered TNC’s platform.
- “Transportation network company” or “TNC” is an organization, including, but not limited to, a corporation, limited liability company, partnership, sole proprietor, or any other entity, operating in California that provides prearranged transportation services for compensation using an online-enabled application or platform to connect passengers with TNC drivers using a personal vehicle.
- “Transportation network company driver” or “TNC driver” means any person who uses a personal vehicle in connection with a TNC’s online-enabled application or platform to connect with passengers in the state pursuant to the TNC license of the TNC. It does not include any individual who is considered an employee under the NLRB or federal law.
Drivers who qualify as active TNC drivers are able to create a transportation network company driver organization, otherwise known as a “TNC driver organization.” AB 340 defines it as an “organization” with all of the following characteristics:
- The organization has engaged in advocacy for drivers who transport passengers in California, or is affiliated with an organization that has engaged in advocacy for drivers who transport passengers in California, for a minimum of five years.
- The organization has experience, or is affiliated with an organization that has experience, in negotiating collective bargaining agreements and representing workers under those agreements, including the representation of workers in filing unfair labor practice charges and in grievance proceedings.
- The organization has as one of its main purposes the representation of workers in their labor relations.
- The organization’s bylaws or other internal governing documents will give TNC drivers the right to be members of the organization and to participate in the democratic control of the organization if the bargaining unit chooses to be represented by the organization.
- The organization is not sponsored by, dominated by, or controlled by a transportation network company.
- The organization is not a company union.
Requirements of a TNC
AB 1340 further provides a variety of reporting requirements for TNCs:
- Within two weeks after the end of each calendar quarter, commencing on January 1, 2026, and at the completion of every three months thereafter, each TNC shall electronically submit to the board a single statewide total of the rides performed during the prior quarter by TNC drivers on its online-enabled application or platform.
- All TNCs under common ownership or control shall be considered to be a single TNC. Failure to submit the required data will result in the Board issuing a complaint charging the TNC with an unfair practice and petitioning a court for temporary relief to compel production of the list.
- Within two weeks after the end of each calendar quarter, commencing with the quarter ending on March 31, 2026, each covered TNC shall submit the following items to the board:
- the name, driver’s license number, and, to the extent known by a TNC, the most recent email address, local residence and mailing addresses, cellular telephone number; and
- the TNC driver’s first date joining the platform and the number of rides the TNC driver completed in the previous six months for each TNC driver who has completed at least 20 rides within the State of California within the prior six months.
What Constitutes an Unfair Practice?
AB 1340 provides multiple examples of unfair practices that TNCs can be held accountable for such as:
- Failure or refusal to provide the board with a list containing the information required under AB 1340 or knowingly providing an inaccurate list or inaccurate information;
- Failure or refusal to negotiate in good faith with a certified driver bargaining organization, as required;
- Failure or refusal to provide a certified driver bargaining organization with information required by the organization that is relevant and necessary in discharging its representational duties or in exercising its right to represent TNC drivers regarding terms and conditions of work within the scope of representation;
- Dominating or interfering with the formation, existence, or administration of any TNC driver organization, or contributing financial or other support to any such organization, whether directly or indirectly, unless required by this act or other law, by any regulations implementing this act or other law, or as a result of a sectoral agreement approved by the board, including, but not limited to, by doing any of the following:
- Participating or assisting in, supervising, or controlling the initiation or creation of any such organization or the meetings, management, operation, elections, or formulation or amendment of the organization’s constitution, rules, or policies;
- Offering incentives to TNC drivers to join any such organization;
- Donating free services, equipment, materials, offices, meeting space, or anything else of value for use by any such organization, unless those items have been negotiated as a benefit or service for TNC drivers in a sectoral agreement approved by the board.
- Requiring a TNC driver to join any company union or TNC driver organization or requiring a TNC driver to refrain from forming, joining, or assisting a TNC driver organization of their choice;
- Encouraging or discouraging membership in any company union or in any TNC driver organization by discriminating with regard to any term or condition of work;
- Discharging, deactivating, or otherwise discriminating with regard to the ability of a TNC driver to obtain rides, or otherwise discriminating against a TNC driver, because they have signed or filed any affidavit, petition, or complaint under this chapter, have given any information or testimony under this chapter, have participated or declined to participate in a TNC driver organization, or have exercised any rights under this chapter;
- Distributing or circulating any blacklist of individuals exercising any right created or confirmed by this chapter or of members of a TNC driver organization, or informing any person of the exercise by any individual of that right or of the membership of any individual of a TNC driver organization for the purpose of preventing those blacklisted or named individuals from obtaining or retaining opportunities for remuneration; or
- Interfering with, restraining, or coercing TNC drivers in the exercise of rights under this act.
Penalties
In addition to any other remedy provided by law, a TNC found to have committed an unfair practice in failing to provide the required information under AB 1340 shall be subject to a civil penalty, not to exceed ten thousand dollars ($10,000) per day, for each day after the deadline that the list was not provided.
The amount of the penalty shall be determined by the board by utilizing the following criteria:
- The size of the TNC;
- The severity of the violation; and
- Any prior history of violations by the TNC.
In addition to the penalty above, a TNC could also be required by the board to pay the board’s attorney fees and costs for any court proceeding initiated by the board to compel production of the list.
Key Takeaways
It is recommended that any companies that qualify as a TNC should be aware of what constitutes an unfair practice and the reporting compliance that takes effect as of January 1, 2026.
Similar to prior laws affecting gig drivers, it is anticipated that there will be challenges to AB 1340, including, but not limited to, preemption. TNCs should continue to monitor any challenges.