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California Prop. 22 Passed. What’s Next?

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NOTE: This article was originally published in March 2021. In August 2021, an Alameda County judge ruled Prop 22 unconstitutional, which you can read about in a separate article here. Read more about the original Proposition 22 ballot measure passed in 2020 in the article below.

Independent contractor rights have been a hot topic recently. With a global pandemic and historic job losses, many individuals were forced to take on gig work. The problem with gig work is that it provides no benefits.

But that changes with California Proposition 22. California voters approved it in the November 3, 2020 election and became law in December, granting rights to some California gig workers.

What is Prop 22?

In 2019, Uber, DoorDash, and similar app-based companies were required to classify drivers as employees under the AB 5 law. Until now, the companies classified their drivers as independent contractors, which meant the gig workers did not have a right to a minimum wage and other benefits.

Prop 22 was an initiative to undo parts of AB 5 and keep app-based delivery delivers and rideshare drivers as independent contractors. This initiative was largely funded by the gig economy companies who threatened to stop operating in California altogether if they were to be forced to classify gig workers as employees.

It passed, but it applies only to app-based delivery delivers and rideshare drivers. If you are a gig worker or any other independent contractor, you may still be misclassified.

Classifying employees correctly is a fundamental part of California employment law and the federal Fair Labor Standards Act (FLSA). If an employee is incorrectly classified as an independent contractor, the employer has to pay back wages and hefty penalties. Maintaining gig workers as independent contractors relieves employers of the burden of overtime, minimum wage, and providing benefits.

California Prop. 22 Passed. What’s Next? 1

New Rights for App-Based Workers

Despite remaining independent contractors, some app-based delivery delivers and rideshare drivers will be entitled to some protection under the law that would normally only be available to employees. Some of them represent significant advancements in independent contractor rights.

Earnings Guarantee

Prop 22 guarantees a wage floor for drivers, much like a minimum wage. Averaged over a two-week period, drivers must make 120% of minimum wage plus 30 cents per mile. If they do not meet that minimum, the company has to provide the difference. This does not include tolls, tips, or airport fees. This also applies only to time logged when a driver accepts a ride through the drop-off, commonly referred to as engaged time.

Healthcare Subsidy

Each driver is entitled to a healthcare subsidy if they work at least 25 hours per week. The time is averaged over a quarter and only includes engaged time. The amount a driver can receive is 82% of the average cost of a Covered California Bronze plan, or roughly $367 per month.

Workers’ Comp (Almost)

Gig workers who drive for an app-based company will receive some coverage for on-the-job injuries. Described as occupational accident insurance, this coverage is similar to but not exactly the same as workers’ compensation insurance. Medical expenses and disability benefits related to on-the-job injuries will be covered for gig workers in limited circumstances.

Not All Gig Workers are Included

Many gig companies see this as a win, while gig workers see it as a setback. Gig workers get some rights from it, but it is more restrictive than AB 5. This leads to some gig workers missing out.

Most gig workers should be classified as employees even after Prop 22, which applies only to app-based delivery delivers and rideshare drivers. App-based delivery drivers and rideshare drivers are the only gig workers who will receive additional benefits under Prop 22.

Protect Your Rights

Even after Prop 22 you may still be misclassified as an independent contractor. Employers often benefit from misclassifying employees as independent contractors. The same can be said for gig economy companies who benefit from it. They can continue to classify app-based delivery delivers and rideshare drivers gig workers as independent contractors in order to avoid paying taxes and offering benefits.

PARRIS employment law attorneys regularly represent independent contractors like you in your fight against your employer. Our goal is to protect your rights and help you collect the wages you deserve. Contact us today for a free review of your case if you believe your employer is misclassifying you as an independent contractor.

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