On November 3, voters in California approved “Proposition 22,” a proposal that effectively creates a brand-new employment designation for drivers of ridesharing services such as Uber and Lyft. The proposal overturns an existing California law, Assembly Bill 5, which was passed by the legislature in September 2019. The bill forced ridesharing services to classify their drivers as employers rather than as self-employed independent contractors. Prop 22 will have implications for worker protections and ridesharing background checks.
Assembly Bill 5 went into effect on January 1, 2020. In August, the Superior Court of San Francisco found that both Uber and Lyft violated the bill: they were still classifying their workers as contractors.
At the time, both companies argued that abiding by the law would be extremely burdensome to their operations and would require at least a temporary halt of services in California, affecting livelihoods of drivers across the state. Uber and Lyft sought and received a court injunction that allowed them to continue operating in California without abiding by Assembly Bill 5.
Proposition 22, which received approval from some 58 percent of California voters, officially labels all “app-based drivers” as independent contractors and not employees. That wording applies to not just ridesharing companies such as Uber and Lyft but also app-based delivery services such as Postmates and DoorDash.
Uber, Lyft, and DoorDash were instrumental in securing majority approval for Proposition 22 from California voters. The three companies spent an unprecedented $200 million to campaign in favor of the proposal. They praised the law for serving the best interests of drivers, claiming that it would protect their “independence” and “flexible work opportunities.”
Advocates for Assembly Bill 5 believed that gig economy drivers deserve the full pay, benefits, employment stability, and other protections offered by employee status.
Prop 22 does make concessions—including healthcare subsidies and insurance plans—for app-based drivers. The policy also legally mandates both ridesharing background checks (a “local and national background check for each app-based driver”) and safety training for new drivers.
The legislation also requires app-based driver network companies to institute zero-tolerance policies for drivers caught or suspected of driving under the influence of alcohol or drugs “while providing rideshare services or delivery services.”
Critics of Prop 22 say that these protections are less substantial than what drivers would receive if classified as employees. Independent contractors have no access to sick leave, overtime pay, or reimbursements for job-related expenses—all protections afforded to employees.
The way that Prop 22 is written makes it very difficult to overturn. The California state legislature would need a supermajority (a seven-eighths vote) to change any part of the law in the future. Despite this fact, a representative from the California Labor Federation has stated to the Los Angeles Times that the passage of Prop 22 will be “only the beginning in the fight to ensure gig workers are provided fair wages, sick pay and care when they’re hurt at work.”
There will likely be further developments to this story—particularly as the discussion of rideshare workers’ rights spreads to territories beyond California’s borders.
About Michael Klazema The author
I am part Marketing Technologist, Product Owner and Innovation Accelerator. I can help organisations with two challenges:
- How to move from an organically grown martech stack and a loose set of innovation initiatives to a state which synchronizes a customer focused strategy with a well thought out governance structure and strategy for marketing technology and innovation initiatives. I specialize in predicting which technology trends will more quickly than expected pass the peak of inflated expectations and provide opportunity for value creation and competitive differentiation.
- How to define the right organizational structure like a lab, Center of Excellence or Shared Service Center for enterprise wide Personalization, Next Best Action, Customer Engagement or Marketing Automation programs and select teams and technologies to scale such programs more rapidly.
I am experienced in managing traditional and agile marketing and software development teams as well as running user experience, design thinking, conversion rate optimization, experimentation and digital innovation and transformation programs.
Both on the agency and client side I have led product teams through functional site enhancements, site redesigns, software selection, martech platform introductions, and software re-platforming exercises.