Law Alert: California Voters Say YES to Prop 22
November 4, 2020
California Voters Say YES to Prop 22
As has been well-publicized, Prop 22 put the issue of the independent contractor status of gig economy drivers before California voters – these voters overwhelmingly voted yes to Proposition 22 on election day according to Associated Press reports. By voting yes, Californians agreed with the gig economy companies that the state’s strict ABC test of independent contractor status should not apply to these drivers.
The gig economy companies have faced heavy pressure from the state (both legislatively and in court) to reclassify drivers as employees and in response have mounted the most expensive ballot initiative in the state’s history. The passage of Prop 22 means that the drivers will not be reclassified as employees, but that the gig economy companies must provide certain guaranteed minimum payments and benefits to these drivers. For example, Prop 22 guarantees drivers minimum earnings (based off of 120% of the local minimum wage), full payment of tips to drivers, per-mile compensation for the use of the vehicle, a healthcare subsidy based on the average weekly amount of hours of “engaged time” a driver performs, and occupational accident coverage. This compromise marks the beginning of an alternate worker classification system (sometimes termed “dependent contractors”) within the United States.
The direct impact of Prop 22 is limited to true gig economy operations and does not translate to a larger win for the transportation industry. However, this victory is another indication of the overreach of AB5 and the value that voters place in being able to perform work as independent contractors.