From Your Front Door to the Ballot – Prop 22’s Impact

About the Author: Daraja Carroll is a third year law student at American University- Washington College of Law. Daraja graduated from San Diego State University and hopes to work on education and civil rights policy after graduating law school. 

 

At $200 million[1], Proposition 22 is the most expensive ballot measure in California’s history and it could potentially change labor laws across the country.

Put simply, California’s Proposition 22 exempts companies like Lyft, Uber, Doordash, and Instacart from classifying their workers as employees.[2] Workers classified as employees gain employment stability and many other protections and benefits, including unemployment, paid sick leave, and health insurance. Before the proposition was on the ballot, a state law [3] and the California Supreme Court’s 2018 Dynamex ruling said workers who performed tasks within a company’s regular business must be treated as employees.[4] Under this law and precedent, these ride-sharing and food delivery companies would need to label their workers as employees and pay for their benefits. Prop 22 rejected this and was unsurprisingly opposed by labor groups that had helped shape AB 5, the aforementioned state law Uber and Lyft were rejecting with Prop 22.

Prop 22 includes a few wins for workers, including stipends to buy health insurance, accident insurance, and some guaranteed level of pay. However, Prop 22 opponents believe companies are providing bare minimum benefits to workers while seeking special treatment and loopholes to avoid shouldering the costs of providing full employment benefits.[5] The guaranteed benefits under Prop 22 are little in comparison to what other permanent workers are entitled to, which is especially concerning for a growing industry like the gig economy.

With an estimated one million gig workers, California has been the largest U.S. market for such laborers since app-based companies emerged a decade ago. It is not surprising that Uber plans to expand the Proposition 22 framework across more states and even nationwide. 58% of voters voted in favor of Prop 22.[6] Uber CEO Dara Khosrowshahi expressed thanks to California voters who “listened to what the vast majority of drivers want, new benefits and protections with the same flexibility.”[7] Though the Uber CEO seems content, many remain discontent with Prop 22. In fact, Uber drivers filed suit against Uber over a “constant barrage” in promoting the initiative[8] and both Uber and Lyft are currently facing a lawsuit from the California government despite the companies’ threat to move headquarters out of the state if they had to qualify workers as employees.[9]

Proposition 22 was a huge win for these large companies but workers are mobilizing across the country[10], labor groups still plan to challenge the measure in court[11] and legislators have urged the Biden Administration to reject similar proposals.[12] With Prop 22’s full impact yet to be seen, the future of the nation’s gig economy is as uncertain as ever. In the meantime, continue tipping your drivers and delivery people!

 

[1] Ryan Menezez, Maloy Moore & Phi Do, Billions Have Been Spent on California’s Ballot Measure Battles. But This Year Is Unlike Any Other, Los Angeles Times (Nov. 13, 2020), https://www.latimes.com/projects/props-california-2020-election-money/, (Those backing the effort had spent more than $200 million to beat the legislation by Monday, more than 10 times as much as Prop 22′s opponents).

[2] California Proposition 22, App-Based Drivers as Contractors and Labor Policies Initiative (2020), https://ballotpedia.org/California_Proposition_22,_App-Based_Drivers_as_Contractors_and_Labor_Policies_Initiative_(2020) (last visited Feb. 1, 2021).

[3] AB-5 Worker status: employees and independent contractors, https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB5 (last visited Feb. 1, 2021).

[4] Dynamex Operations W. v. Superior Court, 4 Cal. 5th 903 (2018).

[5] Shannon Bond, California Voters Give Uber, Lyft A Win But Some Drivers Aren’t So Sure, NPR (Nov. 5, 2020, 6:01AM), https://www.npr.org/2020/11/05/931561150/california-voters-give-uber-lyft-a-win-but-some-drivers-arent-so-sure.

[6] California Election Results, https://www.washingtonpost.com/elections/election-results/california-2020/?itid=lk_interstitial_manual_5 (last visited Feb. 1, 2021).

[7]Edward Ongweso Jr., Uber Wants to Expand Its Anti-Worker Proposition 22 Beyond California, Vice News (Nov. 9, 2020, 9:00AM) https://www.vice.com/en/article/3anqkk/uber-wants-to-expand-its-anti-worker-proposition-22-beyond-california.

[8] Faiz Siddiqui & Reed Albergotti, Uber drivers sue app over ‘constant barrage’ pushing California anti-employment initiative, NPR (Oct. 22, 2020, 5:30PM) https://www.washingtonpost.com/technology/2020/10/22/uber-prop22-suit/.

[9] Shannon Bond, Uber And Lyft Must Make Drivers Employees, California Court Rules, NPR (Oct. 22, 2020, 10:24PM), https://www.npr.org/2020/10/22/926916925/uber-and-lyft-must-make-drivers-employees-california-appeals-court-rules.

[10] U.S. Bureau of Labor, Economic News Release, Union Members Summary (Feb. 22, 2021), https://www.bls.gov/news.release/union2.nr0.htm.

[11] Suhauna Hussain & Johana Bhuiyan, Prop. 22 passed, a major win for Uber, Lyft, DoorDash. What happens next?, Los Angeles Times (Nov. 4, 2020, 7:06PM), https://www.latimes.com/business/technology/story/2020-11-04/prop-22-passed-what-happens-next?fbclid=IwAR1BbFfdYO6mhCgXZA-OE7Gl4uZcH7_86b16HBSXsEn_u-eGOyVGeHhnE-w.

[12] Letter to Congress re: Labor Protections for App Based Workers (Jan. 25, 2021),  https://www.nelp.org/wp-content/uploads/Letter-to-Congress-Labor-Protections-App-Based-Workers-January-2021.pdf.

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