Gig Economy Gets Boost with Proposition 22 Win

The California bill won a sizeable yes vote in the elections and its proponents want to take the campaign nationwide. 

With passage of California’s Proposition 22, the gig economy in California, represented by companies like Uber, Lyft, DoorDash and other app-based ride-hailing and delivery services, has secured the right to keep drivers classified as independent contractors. 

About 58 percent of the more than 11 million Californians who voted in favor of Prop 22 agreed that drivers should be able to maintain their independent status in spite of a labor-friendly Democrat-dominated Legislature that in 2019 passed a law limiting businesses from classifying certain workers as independent contractors. 

A total of about $225 million was spent by both pro- and anti-Proposition 22 groups, with contributions coming mostly from pro-Proposition 22 sponsors and labor spending only about $20 million. The overall massive amount of money spent on the campaign ended in a critical defeat for labor, which vows to continue to fight to provide drivers with minimum wages, overtime, health insurance and reimbursement for expenses.

“The obscene amount of money these multibillion-dollar corporations spent misleading the public doesn’t absolve them of their duty to pay drivers a living wage,” said Art Pulaski of the California Labor Federation in a statement. “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.”

On the other hand, supporters say the measure allows drivers to maintain their freedom to work hours they choose and provides other benefits.

Bill French, 62, a former high school baseball coach who voted for the measure in Huntington Beach, told Insurance Journal, a trade magazine, that he retired early so he could supplement his pay as an Uber driver and work when he wants.

“I don’t need them to control me and tell me when I’m going to work and not going to work,” French said.

According to language in the bill, drivers will remain independent contractors and the companies that use them will be exempt from having to pay sick leave and expense reimbursement, but it also provides some “alternative benefits,” including a guaranteed minimum wage and subsidies for health insurance if independent contractors average 25 hours of work a week. 

First California, then Nation

Now that Proposition 22 has passed in California, efforts are underway to enact similar legislation across the country.

“Now, we’re looking ahead and across the country, ready to champion new benefits structures that are portable, proportional, and flexible,” DoorDash Chief Executive Officer Tony Xu said in a statement.

In an email to its California customers on Wednesday, Uber said the vote paves the way for a more secure future for app-based workers.

“We’ll continue to advocate for drivers everywhere, because we agree that they deserve better,” the email said.

In many states it will be an uphill battle to establish a Proposition 22 climate for gig workers. Laws like the California Legislatures’ law limiting businesses from classifying certain workers as independent contractors have already passed in other states, including Illinois, New York, New Jersey, Connecticut, Washington and Oregon. In July, Massachusetts sued Uber and Lift over allegedly misclassifying drivers as independent contractors.

Although the Department of Labor under the Trump administration has published a rule that would make it easier to classify workers as independent contractors, as President Joe Biden would likely be more sympathetic to Labor.

The Reuters News service has calculated that passage of Prop 22 will save Uber and Lyft each more than $392 million per year in California — almost twice what was spent on advocating for passage of the measure. 

For more information or help, contact the Insurance professionals of the PCOC Insurance Program. Call us at: 877.860.7378.

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