2020 California Proposition 22

Proposition 22 was a ballot initiative in California on the November 2020 state election which passed with 59% of the vote and granted app-based transportation and delivery companies an exception to Assembly Bill 5 by classifying their drivers as "independent contractors", rather than "employees", thereby exempting employers from providing the full suite of mandated employee benefits (which include time-and-a-half for overtime, paid sick time, employer-provided health care, bargaining rights, and unemployment insurance) while instead giving drivers new protections of:

*120 percent of the local minimum wage for each hour a driver spends driving (with passenger or en route), but not for time spent waiting
*$0.30/mile for expenses for each mile driven with passenger or en route
*health insurance stipend for drivers who average more than 15 hours per week driving
*requiring the companies to pay medical costs and some lost income for drivers hurt while driving or waiting
*prohibiting workplace discrimination and requiring that companies develop sexual harassment policies, conduct criminal background checks, and mandate safety training for drivers.

Background

In 2019, Assembly Bill 5 was passed, and it was designed by lawmakers to require companies to classify ride-hail drivers and other gig-economy workers as "employees". It requires companies to classify all workers as employees unless companies can prove that the workers: are not directed or controlled by the company during their work time, and their work is not the company's "core" business, and the worker has their own business doing that type of work. Lyft and Uber refused to comply with this law, and stated a desire to keep drivers classified as independent contractors.

In August 2020, the California court ordered Uber and Lyft to comply with the law within a 10-day deadline. The companies said they would shut down their operation in California if drivers had to become employees. On August 20, the deadline day, the companies asked for an extension. The court granted an extension until November 4, 2020, on the condition that Uber and Lyft CEOs provide a sworn testimony by October 4 confirming their plan to comply with AB 5. The companies indicated they would no longer shut down. The ride-hail companies, joined by DoorDash and Instacart, supported Proposition 22 for the November 3, 2020, ballot election, which was held one day prior to the extended AB 5 deadline on November 4.

In an opinion piece in ''The New York Times'' , Uber's CEO Dara Khosrowshahi advocated for the legal creation of a third employment classification between the current mutually exclusive classes of "employee" and "independent contractor", so that gig workers can have the flexibility and freedom to fit work into ''their'' schedules, while also allowing companies to provide some benefits for them without being forced into the full requirements associated with "employee" classification, which does not allow schedules chosen by the employee, or under 40 hour schedules like the "independent contractor" classification does. He also calls for benefits funds, which pay workers extra cash for each hour worked, that they can use for the benefits they want, (like health insurance or paid time off), while allowing them to work for multiple different companies, all of which would give them cash for this benefit fund based on the hours worked for each company.

Projected Effects

Driver earnings

The California Legislative Analyst's Office stated in an analysis of the Proposition: "Most drivers work part time and many drivers only work for a short time or only drive occasionally." and "Most drivers probably make between $11 and $16 per hour, after accounting for waiting time and driving expenses." Separate from this, a highly contentious literature exists on the topic, with estimates for earnings after Prop-22 ranging as low as $5.64/hour to as high as $25.61/hour, on accounting for idle waiting time, wear-and-tear, and fuel in both cases.

Uber said that 90% of their 1.2 million drivers ''nationwide'' work less than 40 hours per week, with 80% working less than 20 hours per week, and that if they were required to classify drivers as employees, they would terminate 80% of their drivers because their nationwide business can only support 250,000 full-time jobs.

Driver flexibility

Uber claims that Prop-22 is "a better alternative than employment with a full-time, fixed schedule". Critics have argued that Prop-22 would still allow for loopholes allowing gig companies to control drivers' schedules, like penalizing or deactivating workers for cancelling jobs, requiring workers to accept a specific percentage of jobs so that they can continue working.

Driver benefits

As Uber indicates on their website, the driver must be the primary policyholder order to qualify for the healthcare stipend. It specified that Medicare and Medicaid plans and those paid by employers are cannot avail of this benefit. Some have argued that since only "active time" is counted toward the 15 hours / week minimum, with time on different platforms being counted separately, drivers are less likely to be eligible for these benefits. According to polling conducted by Tulchin Research, 86% of surveyed drivers are ineligible for Prop 22 Healthcare Stipend and those eligible are largely unaware of how to do sign up, receiving little information from app-based companies.

Fares

A study released by Uber found that if rideshare companies were required to comply with AB5, it would increase fares to rideshare consumers by 25-100%, depending on the market.

Reception

Support

Lyft, Uber, DoorDash, Instacart, and Postmates contributed over $205 million into campaigns supporting Prop 22, making it the most expensive ballot measure in California's history. This included major funding for the ''Yes on Prop 22'' campaign, and promoting the proposed legislation directly to customers when using their app.

Sponsored support

Some of the companies also forced their workers to support and promote the legislation: Uber sent its drivers in-app messages forcing them to click on either "Yes on Prop 22" or "OK", Instacart ordered its workers to place pro-Prop 22 stickers in customers' shopping bags, and DoorDash forced delivery drivers to use bags saying "Yes on 22".

Title litigation

The ballot title, written by Attorney General Xavier Becerra, is "Exempts App-Based Transportation and Delivery Companies from Providing Employee Benefits to Certain Drivers. Initiative Statute". The ''Yes on Prop 22'' campaign challenged this description as non-neutral in court, but their arguments were rejected by a Sacramento Superior Court judge.

Opposition

The ''No on Prop 22'' campaign was funded by the California Labor Federation, with support from UC Berkeley Labor Center. The campaign received around $19 million in support, mostly from labor groups. Driver groups Rideshare Drivers United, Gig Workers Rising, We Drive Progress, and Mobile Workers United, spoke out against Prop 22. Editorial boards from the ''New York Times'' and ''Los Angeles Times'' also called on voters to reject Prop 22.

The proposition would add protections specific to app-based workers, different from other independent contractors, but these protections would only apply during the time the worker is "engaged" in fulfilling a specific request and not while the worker is logged in to the app and available to fulfill a request.

Polls

Notes:

Result

Ability to amend

All laws created in California by ballot measure are protected from being changed by the state legislature; they can only be changed by another ballot measure. Many ballot initiatives waive this protection, and explicitly state a percentage majority by which they allow the legislature to change the law; commonly, a 2/3 majority is specified. Prop 22 instead designated a 7/8 majority as being required to change it.

Litigation

A lawsuit was filed against the state in January 2021 by the Service Employees International Union over the successful passage of Proposition 22. The lawsuit states that Proposition 22 violates the Constitution of California, as it interferes with workers' access to the state's workers' compensation program and that it "limits the power of elected officials to govern".

On August 20, 2021, Alameda County Superior Court Judge Frank Roesch ruled Proposition 22 unconstitutional because it was not limited to a single subject and because it included a seven-eighths requirement for the legislature to be able to change the initiative which infringed on the legislature's power to set workplace standards. He thereby ruled the entire ballot measure unenforceable. However, the initiative will stay in force while interest groups representing mobile application-based service platforms appeal the ruling.Prop. 22, the gig worker exemption for Uber and Lyft, is ruled unconstitutional
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References

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External links

Official Voter Guide'Yes on Prop 22' campaign website'No on Prop 22' campaign website

2020 California ballot propositions
Labor law in California
Uber
Lyft