Will California Keep Some of its Gig Workers?

Over the last two years we have continued to keep you updated regarding the controversial court decision and subsequent California law that significantly restricts which workers can be classified as independent contractors. As a compromise, Proposition 22 is on November’s ballot. It may offer voters the chance to decide the fate of gig companies and their contractors.

Starting in January 2020, a new California state law, known as AB5, required that all “gig” workers be treated as employees. As such, these workers had to be offered benefits like paid sick leave, overtime pay, healthcare plans, unemployment insurance, and workers’ compensation. Not surprisingly, the new law sparked protest from gig workers and legal action from large employers and transportation industry associations.

Companies employing gig workers, such as Uber and Lyft, were ordered by the Superior Court to classify all contractors as regular employees. The companies say that this decision threatens hundreds of thousands of jobs, along with the possible suspension of their services in the state of California.

If Prop 22 passes, benefits would be tied to each gig worker’s “engaged time” on the job. In the case of Uber and Lyft drivers, this would include time spent completing customer routes (but not lag times in between jobs). Pay would be enforced at a rate of at least 120 percent of minimum wage, and health care subsidies and accident insurance would be included.

The proposal also includes stronger consumer safety standards, such as increased driver background checks and a zero-tolerance policy for drug or alcohol violations.

Proponents of the new measure, which is aimed at drivers in the gig economy, say that companies such as Uber and Lyft offer the opportunity for much-needed flexible employment. More than 80 percent of these contractors work less than 20 hours per week, and cannot commit to set shifts due to other jobs or responsibilities. By a four-to-one margin these drivers say that they prefer to be contractors, not employees.

For customers, failure of Prop 22 could mean longer wait times for rides, limited availability, and higher prices (according to Berkeley Research Group).

Opponents of Prop 22 say that gig workers are exploited by these companies, and need protections from the law. They point to the pandemic as a primary example of the need for paid sick leave, health care benefits, and unemployment insurance.

The issue will be decided on November 3, along with the general election.

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