The results are in… Voters in California approved Proposition 22, the ballot measure that exempts rideshare and delivery companies from classifying their workers as employees.
Drivers are not in universal agreement about the employee vs. independent contractor issue.
However, now that the matter has been settled in California, we’ll examine how this monumental decision will affect gig workers in California, and across the country.
Here’s what this article covers:
- What Proposition 22 means for drivers
- The results of the proposition vote
- The effects on gig economy stocks
- How Prop 22 affects drivers outside of California
- Benefits for drivers—with or without Proposition 22
What Proposition 22 means for drivers
Proposition 22 (officially the App-Based Drivers as Contractors and Labor Policies Initiative) is a measure developed by the gig-service companies, primarily Uber and Lyft, that’s intended to exempt rideshare and delivery drivers from AB5.
As you may remember, AB5 is a law that classified gig workers in California as employees, rather than independent contractors.
In contrast, Prop 22 reclassifies app-based drivers as independent contractors, meaning that California employment-related labor laws will not cover them.
This legislation enacts certain labor and wage policies specific to app-based drivers and companies, including:
- A payment schedule that’s based on the difference between a worker’s net earnings (excluding tips) and a net earnings floor (120 percent of minimum wage applied to a driver’s engaged time, or the time between accepting a service request and completing it, plus 30 cents), adjusted for inflation after 2021, per engaged mile;
- Preventing app-based drivers from working more than 12 hours during a 24-hour period, unless the driver has been logged off for an uninterrupted six hours;
- For drivers who average at least 25 hours per week of engaged time during a calendar quarter, companies would be required to provide healthcare subsidies equal to 82 percent of the average Covered California (CC) monthly premium;
- For drivers who average between 15 and 25 hours per week of engaged time during a calendar quarter, companies would be required to provide healthcare subsidies equal to 41 percent of the average CC monthly premium.
Also under Prop 22, companies would be required to provide or make available:
- Occupational accident insurance to cover at least $1 million in medical expenses and lost income resulting from injuries suffered while a driver was online, defined as using the app and able to receive service requests, but not engaged in personal activities;
- Occupational accident insurance to provide disability payments of 66 percent of a driver’s average weekly earnings during the four weeks prior to injuries being suffered (while the driver was online but not engaged in personal activities) for upwards of 104 weeks, or approximately two years;
- Accidental death insurance for the benefit of a driver’s spouse, children, or other dependents if a driver dies while using the app.
In addition, the Ballotpedia online political encyclopedia explains, Proposition 22 requires the companies to “develop anti-discrimination and sexual harassment policies; develop training programs for drivers related to driving, traffic, accident avoidance, and recognizing and reporting sexual assault and misconduct; have zero-tolerance policies for driving under the influence of drugs or alcohol; and require criminal background checks for drivers. The ballot initiative criminalizes false impersonation of an app-based driver as a misdemeanor.”
While this measure doesn’t give drivers full employee status, it does provide some of the protections being classified as an employee would include. A glaring omission, however, is that Prop 22 does not make provisions for unemployment insurance. This makes the defeat on the part of the state, who has paid, in part, the companies’ share of drivers’ unemployment during the pandemic even harder for them to swallow.
This victory for the companies is likely to send reverberations throughout the industry, all around the U.S., and even the world. Because it does allow the gig driving business to continue operating with an independent contractor-based model, it is a disappointment to those who believed drivers should be treated as employees.
The results of the proposition vote
The results were very surprising. While no one questioned that there was a lot of weight being thrown behind both sides of the contest, it was a shock that the proposition carried 58 percent of the vote by early Wednesday, the day after polling took place. The tally was 6,715,274 Californians in support of the measure, and 4,776,258 who voted “no.”
This was a huge victory for the companies—one that allows them to continue doing business much the way they have in the past. Obviously, spending $200 million, the largest amount ever allocated to passing a state ballot measure in California, paid off for them in a big way.
The effects on gig economy stocks
Another benefit to the companies as a result of Proposition 22’s passage is the surge in stock prices the major players enjoyed immediately following Election Day. On the morning of November 4, Uber’s stock went up 18 percent, and Lyft’s went up 22 percent. This gave Uber an additional $11 billion in market value, and Lyft $1.8 billion.
Obviously, that $200 million they spent on passing the measure barely made a dent. Furthermore, the extra spending they’ll allocate to support drivers, in the form of minimum pay and insurance, is something they can well afford.
The companies may want to hold onto the rest of that money, though, and try to make more. If they expect to be exempted from classifying drivers as employees in every U.S. state, there is much more work to be done.
How Prop 22 affects drivers outside of California
Drivers in California will benefit to some degree from Proposition 22’s provisions, depending on how you see things.
But what about drivers throughout the rest of the country?
Many states will want the same benefits as California drivers for their own gig workers. Because of this, we can expect an increase in government activity aimed at setting minimum requirements to benefit drivers in their jurisdictions.
This could lead to more battles between the companies and the state and local governments that set minimum pay rates and hours for gig workers. Policies such as these, and those contained in Prop 22, may or may not satisfy drivers who feel they should be treated the same as employees, so there will undoubtedly be further disputes, on at least two fronts, in the future.
For drivers, it’s time to take action.
Check out this blog post to learn more about driver groups who are fighting for fair wages and other benefits for drivers. We would expect them to become even more active after Prop 22’s passage.
Get in touch with these groups, and your legislatures, and begin to push for driver rights now.
The gig companies will not just sit and wait however. Uber, Lyft, DoorDash, et al. may get together to pursue federal legislation that will protect them against state laws that force the classification of gig workers as employees.
The time for drivers to seize the moment is now! Contact your local rideshare and delivery driver rights organizations today.
Benefits for drivers—with or without Proposition 22
If you’re a rideshare or delivery driver in California, you’re about to benefit from Proposition 22. You’ll receive some protection from lost income if you can’t drive, plus some opportunities to get medical and life insurance benefits.
The rest of us might feel somewhat envious, but thanks to Gridwise Protection, no driver will be left behind! Gridwise has come up with ways to cushion drivers from the harsh realities of being an independent contractor.
Gridwise Protection will cover you in the event of lost work time for hospitalization, collision repair, or sickness. It even helps if you lose income while you’re disputing an unfair deactivation. In addition, you can get telehealth visits and legal assistance under this plan.
Getting protection from lost income is crucial for drivers—especially now, when it appears that independent contractor status will apply to rideshare and delivery driving for the foreseeable future. Even some California drivers will benefit from the extras that Proposition 22 doesn’t provide.
Plus, Gridwise Protection will cover you even if an accident occurs while you’re NOT online with a rideshare or delivery app.
Gridwise looks out for drivers like you
At Gridwise, we know what drivers need and want, because so many of us are or have been drivers ourselves. That’s why the Gridwise app is the ultimate rideshare and delivery assistant.
Track your earnings, and soon you’ll be able to benefit from seamless earnings entry. That’s right. Once the beta testing period makes the app upgrade glitch-free, all Gridwise users will be able to connect all their apps to Gridwise, and all their earnings will be tracked automatically.
Wouldn’t it be great to drive for all your apps and not have the headache of doing your own earnings calculations? With Gridwise you don’t have to. You simply link our accounts, and get easy-to-read, informative charts like these:
What’s more, you get airport and event info, weather, traffic, and our Perks tab, where you’ll find deals and discounts for drivers, easy access to our blog, and breaking news from the Gridwise YouTube channel.
Like us on Facebook, and you’ll be in on all the great gas card giveaways Gridwise has to offer, and join a community of drivers who have all the tools and information they need from the Gridwise app. Huh? You’re not on Gridwise yet? Download the app now!