What would app-based drivers be classified as for employment?

Proposition 22 would consider app-based drivers to be independent contractors and not employees or agents. Therefore, the ballot measure would override Assembly Bill 5 (AB 5), signed in September 2019, on the question of whether app-based drivers are employees or independent contractors.[1]

The ballot initiative would define app-based drivers as workers who (a) provide delivery services on an on-demand basis through a business’s online-enabled application or platform or (b) use a personal vehicle to provide prearranged transportation services for compensation via a business’s online-enabled application or platform.[1] Examples of companies that hire app-based drivers include Uber, Lyft, and DoorDash. The ballot measure would not affect how AB 5 is applied to other types of workers.

What is Assembly Bill 5 (AB 5)?‍

AB 5 established a three-factor test to decide a worker's status as an independent contractor. The three-factor test requires that (1) the worker is free from the hiring company's control and direction in the performance of work; (2) the worker is doing work that is outside the company's usual course of business; and (3) the worker is engaged in an established trade, occupation, or business of the same nature as the work performed.[2]

Responding to AB 5, Tony West, the chief legal officer for the ridesharing business Uber Technologies, stated, "Because we continue to believe drivers are properly classified as independent, and because we’ll continue to be responsive to what the vast majority of drivers tell us they want most—flexibility—drivers will not be automatically reclassified as employees. ... We expect we will continue to respond to claims of misclassification in arbitration and in court as necessary, just as we do now."[3] Likewise, John Zimmer, president of Lyft, said, "We are focused on operating as we are."[4]

On August 10, 2020, the Superior Court of San Francisco ruled that Uber and Lyft violated AB 5 and misclassified their workers. Attorney General Xavier Becerra responded, "The court has weighed in and agreed: Uber and Lyft need to put a stop to unlawful misclassification of their drivers while our litigation continues." Both Uber and Lyft stated that, unless the court's ruling was postponed, their companies could suspend app-based operations within California.[5][6][7][8] On August 20, the California First District Court of Appeal stayed Superior Court Judge Schulman's ruling from taking effect.[9]‍

Who is Behind the Campaigns Surrounding Proposition 22?‍

On August 30, 2019, three companies—DoorDash, Lyft, and Uber—each placed $30 million into campaign accounts to fund a ballot initiative campaign should the legislature pass AB 5 without compromising with the companies. "We remain focused on reaching a deal, and are confident about bringing this issue to the voters if necessary," said Lyft spokesperson Adrian Durbin.[10][11][12] Gov. Gavin Newsom (D) signed AB 5 on September 18 without an exemption for app-based drivers and employers. The ballot initiative was filed on October 29, 2019. Brandon Castillo, a spokesperson for the campaign supporting the initiative, stated, "We're going to spend what it takes to win. It's been widely reported that three of the companies already shifted $90 million, but we're still in the early phases. The bottom line is: We're committed to passing this."[13] The companies Instacart (Maplebear, Inc.) and Postmates also joined the campaign.[14]

Through September 4, 2020, Yes on Proposition 22 received $181.4 million, which is the most funds that an initiative campaign has ever received in California (not adjusted for inflation and based on available reports from Cal-Access). Lyft, Uber, and DoorDash each contributed about $48 million, InstaCart provided about $28 million, and Postmates contributed about $10 million.

The campaign No on Prop 22 received $4.8 million. The International Brotherhood of Teamsters and SEIU-UHW West—labor unions—provided about 52 percent of the campaign's total funds.

What else would the ballot measure change?‍

Since Proposition 22 would consider app-based drivers to be independent contractors and not employees, state employment-related labor laws would not cover app-based drivers. Proposition 22 would enact labor and wage policies that are specific to app-based drivers and companies, including:[1]

• payments for the difference between a worker's net earnings, excluding tips, and a net earnings floor based on 120% of the minimum wage applied to a driver's engaged time and 30 cents, adjusted for inflation after 2021, per engaged mile;

• limiting app-based drivers from working more than 12 hours during a 24-hour period, unless the driver has been logged off for an uninterrupted 6 hours;

• for drivers who average at least 25 hours per week of engaged time during a calendar quarter, require companies to provide healthcare subsidies equal to 82% the average California Covered (CC) premium for each month;

• for drivers who average between 15 and 25 hours per week of engaged time during a calendar quarter, require companies to provide healthcare subsidies equal to 41% the average CC premium for each month;

• require companies to provide or make available occupational accident insurance to cover at least $1 million in medical expenses and lost income resulting from injuries suffered while a driver was online (defined as when the driver is using the app and can receive service requests) but not engaged in personal activities;

• require the occupational accident insurance to provide disability payments of 66 percent of a driver's average weekly earnings during the previous four weeks before the injuries suffered (while the driver was online but not engaged in personal activities) for upwards of 104 weeks (about 2 years);

• require companies to provide or make available accidental death insurance for the benefit of a driver's spouse, children, or other dependents when the driver dies while using the app;

Proposition 22 would define a driver's engaged time as the time between accepting a service request and completing the request.[1]

Uber CEO Dara Khosrowshahi said, "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."[15] In Rigging the Gig, researchers with the Partnership for Working Families (PWF) and National Employment Law Project (NELP) wrote, "the benefits contained in the initiative pale in comparison to what workers are entitled to under state law."[16]

Proposition 22 would also require the companies to: develop anti-discrimination and sexual harassment policies; develop training programs for drivers related to driving, traffic, accident avoidance, and recognizing and reporting sexual assault and misconduct; have zero-tolerance policies for driving under the influence of drugs or alcohol; and require criminal background checks for drivers. The ballot initiative would criminalize false impersonation of an app-based driver as a misdemeanor.[1]

Amending Proposition 22 would require a seven-eights (87.5%) vote in each chamber of the California State Legislature and the governor's signature, provided that the amendment is consistent with, and furthers the purpose of, Proposition 22. Changes that are not considered consistent with, and furthering the purpose of, Proposition 22 would need voter approval.[1]

‍What is Proposition 22?

If approved, Proposition 22 will classify drivers as independent drivers rather than employees, thus making the drivers ineligible for various state employment laws such as minimum wage and unemployment insurance. However, the drivers will be entitled to minimum earnings, healthcare subsidies and vehicle insurance. ‍

Official Ballot Arguments for Proposition 22

Official ballot arguments in favor of Proposition 22

1. Protect the choice of app-based drivers to work as independent contractors—saving California jobs when millions are struggling financially.

2. Improves app-based work by requiring companies to provide new benefits, including: guaranteed minimum earnings, funding for health benefits, medical and disability coverage for on-the-job injuries, additional protections against harassment and discrimination.

See all the arguments in favor of proposition 22 here.

Official Ballot Arguments against Proposition 22

Prop. 22 creates a special exemption that eliminates basic workplace benefits and replaces them with a new lower earnings guarantee and healthcare subsidy payments designed to save the companies money.

Prop. 22 contains deceptive wording to cynically try to convince us they are strengthening driver protections. The truth is, Uber and Lyft are already required to perform background checks, and the new provisions would eliminate required sexual harassment training and the obligations onUber and Lyft to investigate customers’ and drivers’ sexual harassment claims.

See all the arguments against of proposition 22 here.

Official Websites for Proposition 22

Visit the official website for Yes on Proposition 22 here: https://yeson22.com/

Visit the official website for No on Proposition 22 here: https://nooncaprop22.com/

Who is Funding Proposition 22

Protect App-Based Drivers And Services was organized as a political action committee (PAC) to support the ballot initiative. Protect App-Based Drivers And Services, along with allied committees, had raised $181.3 million, including $48.3 million from Lyft, Inc., $47.9 million from Uber Technologies, Inc., and $47.7 million from DoorDash, Inc.[14]

Who is Supporting Proposition 22?‍

Betty Jo Toccoli, president of the California Small Business Association 

Jim Pyatt, president of the Independent Drivers Alliance of California

Minnie Hadley-Hempstead, president of the NAACP Los Angeles‍

Who is Opposing Proposition 22?‍

Alvaro Bolainez, Uber driver 

Nourbese Flint, executive director of the Black Women for Wellness Action Project 

Art Pulaski, executive secretary-treasurer of the California Labor Federation

Related Stories

Getting Better, But Paid Less: Why Some Drivers Support AB 5

It's My Passion: Rideshare Driver Shares Story

For more information, go to ballotpedia.org. ‍

Have an opinion on this ballot measure? Share your thoughts in a written or video commentary! Email it to hoa@ivn.us
What Would App-Based Drivers be Classified as for Employment?