According to California Labor Code section §3353, an independent contractor is a “person who renders service for a specified recompense for a specified result, under the control of his principal as to the result of his work only and not as to the means by which such result is accomplished.” Independent contractors are not afforded the same benefits and protections as employees under the law.
In August 2020, a California judge ruled that Uber and Lyft must reclassify their independent contractors to employees to provide these same protections and benefits. The judge reasoned that these companies circumvented the ruling of AB-5, which classifies independent contractors working for certain companies as employees.
Gig companies such as such as Uber, Lyft, Doordash, Postmates, and Instacart initially allowed anyone with a clean car and a background check to work for them as independent contractors. Labor groups and lawmakers brought forth issues claiming that independent contractor status deprives these drivers from typical workplace benefits, such as healthcare, paid time off, and wage protections. Furthermore, these growing companies are also exempt from paying local and state taxes on employees.
During the 2020 election, California voters overwhelmingly passed Prop 22, which allowed these gig companies to keep their drivers as independent contractors. Prop 22 also exempted these companies from adhering to AB-5. Although the Prop maintains that drivers remain independent contractors, drivers will receive some employment benefits, such as 120% minimum wage, healthcare stipend, and car insurance.
However, there has been significant pushback on why Prop 22 is not beneficial to drivers. For example, the excess minimum wage only applies to “engaged time,” which is time en route to a pickup or driving time. This would not apply to time waiting for a fare. Since drivers spend about a third of their time waiting for a customer, the measure’s pay floor would translate to about 80% of the minimum wage. Drivers would receive a meager 30 cents per mile, no sick days or family leave, and no opportunity to form a union.
Whether Prop 22 will be beneficial for gig workers in California is yet to be determined. As long as there is a balance of flexibility and protection for drivers, there is hope that the passing of Prop 22 will be favorable in the long run.
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