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California Voters Weighed In: Gig Workers are Independent Contractors

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California voters approved a ballot that exempts Uber, Lyft and similar companies from Assembly Bill 5 and its test for determining worker classification.

Santa Clara, CAProposition 22, approved by California voters in November, has classified drivers for app-based companies as independent contractors. Ten million votes were counted and the resolution led by nearly 2 million votes.

The ballot measure was considered a last-ditch effort by gig companies to get around California’s AB5 law, which classifies gig workers—such as Uber and Lyft drivers—as employees with minimum wage protections and employment benefits. Although the AB Law went into effect in January 2020, Uber and Lyft refused to obey the law--including a ruling by a California judge in August 2020 that they have to comply with AB5, a decision upheld by a state appeals court last month-- by arguing that they are not a transportation business. Rather, they provide a tech platform, which has been coined the “platform defense” by Wired. It is Silicon Valley’s favorite get out of jail card, e.g., “Judge, I couldn’t have committed the crime, I was a platform at the time.”

Back in September, Uber pledged to keep fighting AB5’s designation of most gig-economy drivers as employees rather than independent contractors, saying it would not reclassify its drivers if the bill becomes law in January. Uber, Lyft and other gig companies effectively spent $200 million to change the employment law. But Uber alone would require $500 million to comply with the AB5 law, according to one expert.

Proposition 22

Proposition 22 classifies drivers for Uber, Lyft and other app-based transportation and delivery companies such as DoorDash as independent contractors, unless it sets drivers’ hours, requires acceptance of specific ride or delivery requests, or restricts working for other companies. Prop 22 also requires the companies to provide some traditional entitlements, including minimum earnings, some health benefits, and vehicle insurance. Drivers will also have access to occupational accident insurance to cover on-the-job injuries, which would include coverage for medical expenses and disability benefits.

But the benefits are only calculated based on the hours spent driving and making deliveries and does not count the time spent waiting for riders or orders. Health benefits translate to a stipend for health insurance for those who work more than 15 hours a week and a health care contribution equivalent to either 50 or 100 percent of the employer-provided average under the Affordable Care Act.

On the other hand, AB5 classifies gig workers as employees with full benefits, including minimum wage, health care and the right to organize.

Opposition to Prop 22

The opposition mostly comes from labor groups and some Democratic nominees.

“The obscene amount of money these multi-billion dollar corporations spent misleading the public doesn’t absolve them of their duty to pay drivers a living wage, provide PPE to protect workers as the pandemic deepens or repay taxpayers for the nearly half a billion these companies have cheated from our state unemployment fund,” Art Pulaski, executive secretary treasurer of the pro-labor organization the California Labor Federation, said in a statement and reported by The Hill (Nov 4, 2020). “The end of this campaign is only the beginning in the fight to ensure gig workers are provided fair wages, sick pay and care when they’re hurt at work.”

Mekela Edwards, a ride-share driver in Oakland with the No campaign, told The Hill that Prop 22 is “a bad proposition, it's bad for labor laws, it’s bad for workers, and it really puts me as a driver in a very vulnerable spot. I’m an essential worker … we deserve to have a minimum wage.”

Prop 22 Paves Way for Other Industries?

Stanford University law professor emeritus William Gould, a labor lawyer and professor emeritus who studies the gig economy, said “any number of industries where companies have in the past misclassified workers” like construction, nursing or trucking could be emboldened to push for similar exemptions. Gould said that “Proposition 22's success could mean other big tech companies would seek to replicate Uber's and Lyft's strategy to reshape California law to their advantage.” And it could go beyond tech companies to construction, nursing, or any industry that hires part-time employees.


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