Californians Vote “YES” on Proposition 22

On the 3rd of November 2020, Californians took to the polls to cast their votes on more than the presidential election. But also on the employment status of rideshare, app-based drivers within the state by voting on California Proposition 22 or the App-Based Drivers as Contractors and Labor Policies Initiative

With 58.35% of voters deciding “Yes” on Proposition 22, Assembly Bill 5 (AB 5), which was signed into effect September 2019, was overturned, classifying rideshare drivers as self-employed and not employees of the platforms.

This is considered a big victory for companies such as Uber, Lyft, and DoorDash, who have been campaigning in favor of the proposition throughout the last year.

What is Assembly Bill 5?

Although Proposition 22 has overturned AB 5 with regards to app-based rideshare workers, the bill remains in effect classifying the employment status of those outside of the app-based driver industry.

AB 5 provides criteria necessary to determine the employment status of a worker. A worker is to be considered an employee of a company, and not an independent contractor, unless the hiring company is able to prove each part of the ABC test.

A. “The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

B. The person performs work that is outside the usual course of the hiring entity’s business.

C. The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”

What does California Proposition 22 Include?

Yes on Proposition 22 may have classified app-based drivers as independent contractors, however, the proposition includes protections for the drivers and awards certain requirements and responsibilities to the platform based companies on behalf of the workers. Some of the labor and wage policies now required of drivers and companies are as follows:

Healthcare subsidies requirements from companies

– Workers averaging 25 hours or more a week of engaged time are to be provided subsidies from the company equally that of 82% of the average California Covered premium on a monthly basis.

– Workers averaging between 15 and 25 hours a week of engaged time are to be provided subsidies from the company equally that of 41% of the average California Covered premium on a monthly basis.

– Drivers can earn multiple contributions from every platform they provide services for.

Occupational accident insurance coverage from companies

Companies must cover at least $1 million in medical expenses as well as cover loss of income should drivers be injured while performing work for the platform – which is defined as the driver is using the app and can receive service requests.

– Companies must provide 66% of the driver’s average weekly earnings, based on the 4 weeks prior to the sustained injury, in disability payments for an upwards of 104 weeks.

Accidental death insurance must be provided to or available for spouses, children, or other dependants of drivers should the driver be fatally injured while performing services for the app.

Fixed wage rate

Companies must pay the difference between the net earnings (excluding tips) and a net earnings floor based on 120% of minimum wage plus 30 cents, which is to be adjusted for inflation after 2021. This would guarantee drivers approximately $21 per hour.

Working hour restrictions

– Drivers are to be limited from working more than 12 hours within a 24-hour period, unless they log off for an uninterrupted 6 hours.

Note: Proposition 22 has defined the engaged time of a driver as the time between accepting a service and the completion of the service request.

Other requirements that companies must adopt are:

– Anti-discrimination policies
– Sexual harassment policies and training programs for recongnizing a and reporting sexual harrassment
– Driver training programs geared towards driving, traffic and accident avoidance
– Zero tolerance policies for driving under the influence of drugs or alcohol
– Driver criminal background checks

Proposition 22 also established the criminalization of impersonating an app-based, rideshare driver as a misdemeanor in the state of California. 

In order to amend Proposition 22, 87.5% vote (seven-eighths) in each chamber of the California State Legislature is necessary along with the governor’s signature of approval. The amendments must comply with and be consistent with the purpose and intent of Proposition 22. Any amendments found to be inconsistent or impeding on the purpose of the proposition need state voter approval to be included. 

Campaign Funding for Proposition 22

The campaign backings for “Yes” and “No” on Proposition 22 raised millions of dollars in funding. Yes on Proposition 22 raised $202.97 million in backing from companies such as Uber (contributing $57 million), DoorDash ($52 million), Lyft ($49 million), Instacart ($32 million) and Postmates ($13 million).

While their counterpart, No on Prop 22, received $19.75 million in campaign donations from labor unions and union affiliated organizations including: the California Labor Federation, SEIU Local 721, the International Brotherhood of Teamsters, SEIU Local 1021, SEIU-UHW West, UFCW International Union and UFCW Local 770.