Independent Contractor Misclassification and Compliance News October 2025

As the independent workforce continues to grow, so do the issues of worker compliance and misclassification. It is important for enterprises to remain informed about the latest laws, regulations, and developments surrounding these topics. Each month, we bring you the latest news stories from around the web.

New California Law Allows Drivers Who Are Independent Contractors to Organize and Collectively Bargain — But It May Not Survive Legal Challenges

On October 3, 2025, California Governor Gavin Newsom signed into law the Transportation Network Company Drivers Labor Relations Act (AB 1340), which establishes a framework for rideshare workers to organize. The law provides that transportation network company (TNC) drivers have the right to form, join, and participate in driver organizations, including bargaining and engaging in other activities for mutual aid or protection. The law also relies on an existing board to enforce its provisions. It creates a system where app-based drivers—who are independent contractors—can choose to negotiate with the companies that employ them.

California’s Transportation Network Company Drivers Labor Relations Act (AB 1340) is similar to an ordinance adopted by Seattle in 2015. The Seattle ordinance was challenged on several grounds, including that it violated antitrust laws. Seattle argued that the ordinance fell within an exception to antitrust laws allowing state actions that would otherwise be prohibited. Eventually, Seattle amended the ordinance to remove drivers’ ability to bargain over wages, and the challengers agreed to end the lawsuits.

AB 1340 has provisions appearing designed to overcome potential challenges. The law only applies to drivers who are independent contractors and therefore would not conflict with the National Labor Relations Act, which governs employees and supports employees’ rights to organize and collectively bargain. The law also states that “[i]t is the state’s intent that the state action antitrust exemption to the application of federal and state antitrust laws shall apply…” This language reflects California’s attempt to shield the law from federal antitrust scrutiny.

Aaron Gott, in two thoughtful blog articles, argues that AB 1340 is unlikely to survive antitrust challenges. Gott notes that the state action exception applies when there is state regulation, and AB 1340 does not create state regulation—it establishes a system for independent contractors to collectively bargain under state oversight. He contends that the system created by AB 1340 does not fall within the established state action exception, and challenges to the law are likely to be successful.

For now, California’s Transportation Network Company Drivers Labor Relations Act provides a way for app-based drivers to organize and bargain together.

For more information, check out our resources page on misclassification and compliance. If you have any questions about engagement, classification, or management of your independent workforce, we’re always here to help.