AB 1340 creates a new, state-supervised labor-relations framework for transportation network company (TNC) drivers in California. The bill tasks the Public Employment Relations Board (PERB) with certifying a single statewide bargaining representative for drivers, defining which TNCs are covered, and overseeing negotiation, mediation, arbitration, and enforcement of sectoral agreements that would apply across covered companies.
This law matters because it moves beyond individual-company arrangements and gives drivers a path to industrywide (sectoral) bargaining while preserving each company’s control over its product and algorithms. It also builds in specific thresholds, timelines, data reporting requirements, and enforcement tools — and explicitly seeks a state-action antitrust exemption for bargaining activity while accommodating the limits set by Proposition 22.
At a Glance
What It Does
The bill authorizes statewide certification of a single driver bargaining organization and requires covered TNCs to bargain in good faith on mandatory subjects; if parties cannot agree, PERB-directed mediation and interest arbitration produce a recommended sectoral agreement that the board reviews and can approve. It defines coverage by quarterly ride-volume reporting (covered TNCs = those whose rides equal or exceed 95% of statewide volume).
Who It Affects
Large TNCs that together account for 95% of ride volume, TNC drivers who meet the statute’s active-driver threshold, driver organizations seeking certification, and PERB (which gains rulemaking, investigatory, and enforcement duties). Smaller or new-entry TNCs face optional opt-in or later mandatory coverage if they reach the threshold mid-agreement.
Why It Matters
AB 1340 creates California’s first legal path to sectoral agreements for app-based drivers, shifting bargaining from company-by-company talks to industrywide minimums. That change affects pricing, driver earnings/benefits, deactivation appeals, and how TNCs design features that touch labor, while raising antitrust, data-security, and competitive-entry questions.
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What This Bill Actually Does
AB 1340 builds a labor-relations architecture for app-based drivers under PERB’s supervision. It begins by declaring state policy favoring driver self-organization and sectoral bargaining, and it explicitly signals the intent that bargaining activities be covered by a state-action antitrust defense.
The bill defines key terms (TNC, covered TNC, active TNC driver, certified driver bargaining organization), and gives PERB the authority to treat drivers and driver organizations analogously to employees and labor organizations for purposes of administering the new chapter.
The bill creates a two-step process to determine coverage and driver eligibility. Each quarter TNCs must submit statewide ride totals; PERB ranks companies and designates as covered those with rides that cumulatively reach 95% of statewide volume.
Covered TNCs then submit quarterly lists of drivers who completed at least 20 rides in the prior six months; PERB calculates the median rides among those drivers and designates drivers at or above that median as “active,” eligible to vote or sign proofs of support.Driver organizations apply for designation as a qualified TNC driver organization and then pursue representation through a proof-of-support regime: 10% authorization opens a protected window and access to lists; 30% triggers certification or an election; a majority of active drivers auto-certifies a group. Once certified, the organization represents the statewide bargaining unit of all drivers for covered TNCs, with limited windows for decertification and challenge.Bargaining is industrywide: certified organizations negotiate mandatory subjects (earnings, benefits, deactivations, appeals, paid leave, grievance/arbitration procedures, safety purchase mandates, dues deductions, and the like).
TNCs retain exclusive product and algorithm control. Parties must negotiate in good faith, can form multicompany committees, and are required to follow mediation and an expedited interest-arbitration process if bargaining stalls.
The arbitrator issues binding recommendations on mandatory subjects and nonbinding recommendations on other issues; PERB’s general counsel reviews proposed agreements for prohibited provisions, public policy consistency, and anticompetitive effects before the board issues a final order. Approved sectoral agreements become minimum standards binding on all covered TNCs for 3–5 years (with mechanisms for emergency negotiation, rescission, and opt-in by noncovered TNCs).
The Five Things You Need to Know
Covered TNCs are those whose reported quarterly rides, when ranked from largest to smallest, cumulatively equal or exceed 95% of statewide ride volume; PERB publishes the list each quarter.
PERB determines who is an active TNC driver by taking drivers with at least 20 rides in six months, calculating the median rides for that population, and designating drivers at or above the median as active and eligible to vote or sign support.
A driver organization can trigger board action with proof that it has authorization from 10% of active drivers (opens a protected period); 30% proof leads to certification or an election unless a majority of active drivers directly designate the organization.
Sectoral agreements require approval by covered TNCs representing at least 80% of industry rideshare volume and must cover mandatory subjects (earnings, deactivation appeals, paid leave, grievance/arbitration, dues deductions, safety purchase rules, etc.); arbitrators must issue binding recommendations on mandatory items within statutory timelines.
TNCs face civil penalties up to $10,000 per day for willful failure to produce required quarterly driver/ride lists, and certified bargaining organizations can receive automated dues deductions after a driver’s electronic authorization, which TNCs must implement within 30 days.
Section-by-Section Breakdown
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Policy goals, antitrust intent, and definitions
These opening sections declare California’s policy favoring driver self-organization and expressly state the Legislature’s intent that bargaining activities receive state-action antitrust protection. Definitions set the statutory perimeter — TNC, covered TNC, active TNC driver, certified driver bargaining organization, company union, sectoral agreement — and limit coverage for drivers deemed employees by final federal or state orders. Practically, these definitions determine who votes, who negotiates, and which companies must participate in industrywide deals.
Driver rights and PERB authority
The bill extends classic labor rights (organize, bargain, concerted activity) to TNC drivers and grants PERB enforcement, investigatory, and rulemaking authority. PERB can adopt regulations, apply employee-related provisions to drivers and organizations for administration, and pursue unfair practice charges and injunctive relief — effectively making PERB the supervisory body for this hybrid collective-bargaining regime.
Quarterly reporting and active-driver lists
Covered and potential covered TNCs must submit manipulable electronic ride-volume totals every quarter; PERB aggregates and designates covered TNCs (95% threshold). Covered TNCs also submit driver-level lists for anyone with at least 20 rides in six months, including identifying and contact details; PERB computes the median rides to establish the active-driver universe. These data flows underpin elections, certification thresholds, and enforcement — and the bill includes strict timelines and daily penalties for willful noncompliance.
Organization qualification, proof-of-support, and elections
PERB’s general counsel fast-tracks determinations whether an entity qualifies as a TNC driver organization. Certification follows a tiered proof-of-support model: 10% opens a protected window and gives access to driver lists; 30% triggers certification or an election unless a majority already designates the group. Elections are remote-electronic, include runoff mechanics, and the certified organization is exclusive representative statewide, with limited decertification windows and a one- to three-year uncontested certification period tied to bargaining agreements.
Representative rights, dues, and TNC autonomy
Once certified, the bargaining organization receives quarterly driver lists (subject to security certification), may collect voluntary dues via payroll-style deductions, and must represent all drivers fairly. Simultaneously, each TNC keeps exclusive control over product, algorithms, pricing, and operational design — the bill protects company autonomy while carving out a narrow set of mandatory bargaining topics.
Sectoral agreement content, bargaining process, mediation and arbitration
Sectoral agreements must include specific items (deactivation appeals, paid leave, trip earnings disclosure, grievance/arbitration, safety purchase rules, dues procedures, fund administration, and agreement duration). Parties must negotiate in good faith and either form multicompany committees or be required to bargain jointly. If bargaining reaches an impasse, the statute prescribes mediator selection, mandatory mediation windows, and a structured interest-arbitration path where arbitrators issue binding recommendations on mandatory subjects under tight timelines and factoring in financial ability, service impact, and nondiscrimination among entrants.
New entrants, mid-term coverage, and opt-ins
TNCs that exceed the 95% rideshare threshold after a sectoral agreement has taken effect become covered and are bound immediately unless they secure injunctions or other orders; emergency negotiations and narrow remedial paths follow. Noncovered TNCs may voluntarily opt in to a sectoral agreement for its remainder. The statute provides mechanisms to isolate provisions rendered unlawful and to negotiate emergency exceptions without reopening whole agreements.
Board review and final approval of sectoral agreements
After parties ratify or an arbitrator recommends an agreement, PERB’s general counsel reviews it against mandatory-subject coverage, prohibited clauses, public-policy standards, and competitive effects. The counsel issues a recommendation and the board issues a final order within fixed windows; disapproval sends parties back to bargaining or arbitration remand. Once approved, sectoral agreements become minimum binding standards across covered TNCs.
Unfair practices, remedies, confidentiality, and regulations
The bill specifies employer-side and organization-side unfair practices (refusal to bargain, domination, coercion, blacklists, data withholding), allows injunctive relief, exempts mediation/arbitration meetings from Bagley-Keene, and authorizes emergency PERB regulations. It also contains severability and permits PERB to adopt emergency rulemaking to implement the chapter.
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Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Active TNC drivers who regularly work on platforms: They gain a statutory route to industrywide representation, grievance and deactivation appeals processes, organized bargaining over earnings and benefits, and access to dues-funded services and legal representation.
- Certified driver bargaining organizations: The statute creates a fast pathway to statewide certification, exclusive representation rights, access to quarterly driver contact lists, and statutory dues-deduction mechanisms to fund representation and services.
- Riders and the public: Potential indirect benefits include more standardized deactivation procedures, safety-related protocols negotiated industrywide, and fewer disruptive individual-company disputes if sectoral agreements reduce recurring conflicts.
Who Bears the Cost
- Covered TNCs (the largest platforms): They must negotiate industrywide minimums, finance their share of mediation/arbitration, implement dues deductions and reporting systems, and potentially absorb higher compensation or benefit costs set in sectoral agreements.
- Smaller or new-entry TNCs trying to grow: The 80%-by-volume approval rule and sectoral minimums may entrench dominant players and raise barriers for entrants that cannot meet costs or that disagree with uniform terms.
- The Public Employment Relations Board (PERB) and state budget: PERB assumes new investigative, rulemaking, mediation, arbitration-selection, and approval duties that will require staffing, technical infrastructure for secure data handling, and resources for litigation defense if its approvals are challenged.
Key Issues
The Core Tension
The central dilemma is balancing collective, industrywide protections for frequently active drivers against the need to preserve competitive entry and company control over products: the law gives drivers a path to sectoral minimums and dispute resolution but leaves dominant platforms with veto and design authority that can both protect innovation and dilute the bargaining power the statute intends to create.
AB 1340 resolves important procedural points but leaves several practical and legal tensions. First, the bill’s design mixes a statewide exclusive representative and sectoral bargaining with continued company control over products and algorithms; that split creates repeated lines of dispute about which features are labor subjects versus product choices.
The statute attempts to limit this by listing mandatory subjects and prohibiting clauses that alter driver legal status or reduce Prop 22 minimums, but disputes over where specific algorithmic changes fall (safety, dispatch, pay transparency) are likely and require PERB or arbitrators to draw fine lines.
Second, the active-driver definition (drivers with ≥20 rides in six months, then above-the-median rides) produces a moving electorate that can exclude intermittently engaged drivers and produce volatile certification pools quarter-to-quarter. This median-based rule keeps the voter set focused on frequent drivers, but it also risks underrepresenting drivers with irregular work patterns and invites strategic behavior around data submissions, platform deactivations, or timing of proofs of support.
Data privacy obligations and security certs for organizations receiving driver lists are required, but the bill assigns liability limits (TNCs not liable for data breaches by the board or certified organization), leaving open who ultimately bears breach risk.
Third, the bill’s antitrust posture — an express state-action intent — will not by itself immunize agreements from legal challenge. Courts apply strict standards for a state-action defense (clear articulation of policy and active state supervision).
PERB’s review and approval process is designed to provide active supervision, but its sufficiency will depend on how robustly the board documents review, how transparently it assesses anticompetitive effects, and whether arbitration recommendations are treated as genuinely state-supervised outcomes. Finally, the approval mechanics concentrate effective power: covered-TNC approval thresholds (80% of volume and inclusion of the two largest firms) give large platforms leverage in ratification and emergency negotiation scenarios, raising competitive-fairness questions that the arbitrator and PERB must weigh carefully.
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