Proposition 22, which is titled as “Exempts App-Based Transportation and Delivery Companies from Providing Employee Benefits to Certain Drivers,” has been a hot issue discussion for the many independent contractors who work for the rideshare apps.
The ballot initiative is California’s most expensive proposition. Uber, Lyft, Postmates, DoorDash, and Instacart have invested more than $180 million in support of Prop 22, which would consider drivers for delivery and rideshare apps as “independent contractors,” not employees or agents, “unless a company: sets a driver’s hours, requires drivers to accept certain rides or deliveries, or restricts working for other companies,” according to the proposal.
Prop 22 would therefore override the previous Assembly Bill 5 (AB 5) signed by Gavin Newsom last year to determine the status of workers as either independent contractors or employees. Delivery and rideshare drivers are categorized as employees, not independent contractors, according to AB 5 guidelines. This means companies, such as Uber, Lyft and DoorDash should provide employee benefits and protection. Some app companies have been sued by the State Attorney General because they continued to hire drivers as independent contractors.
Yes on Prop 22 would classify app drivers as independent contractors, they wouldn’t be protected or receive benefits such as unemployment- and workers’ compensation, overtime, or minimum wage.
According to the proposal, Prop 22 would offer other benefits for independent contractors, such as a rest policy limiting drivers from working more than 12 hours per day. The new measure also guarantees a minimum compensation of at least 120 percent of the minimum wage per hour. Drivers would also receive health insurance paid by rideshare and delivery companies, as well as medical expenses covered by the company if a driver gets injured while working. Prop 22 would also prohibit discrimination and create sexual harassment policies, as well as require background checks, and provide safety training for drivers.
“What Prop. 22 is about is starting to move into the best of two worlds: you’ve got flexibility, you’re your own boss, you’re your own CEO, but you do have protections,” Uber CEO Dara Khosrowshahi said.
Supporters include the NAACP of California; the Latin Business Association and the California Small Business Association.
There is a fiscal impact of Prop 22, which means that drivers as well as stockholders would pay higher income tax because drivers would accumulate more income, and companies would own higher profits.
Opponents argue that Prop 22 would remove workers’ benefits and replace them with a new, lower earnings guarantee, as well as subsidized healthcare designed for companies to save money.
But if Prop 22 were dismissed, rideshare and delivery fees would be higher since drivers would be considered employees under AB 5. This would mean less access to rideshare and delivery companies and longer wait times.