Proposition 22, the ballot measure that passed in November 2020, officially became law in California following a ruling by the California Supreme Court. The decision is a significant victory for app-based companies such as Uber, Lyft, DoorDash, and Instacart, as it solidifies their ability to classify gig workers as independent contractors rather than employees. These companies have long fought to maintain their business models, which rely on gig workers to provide on-demand rides and deliver food and other goods.
Both Uber and Lyft have expressed support for the Supreme Court’s decision, stating that the majority of drivers surveyed in California believe Prop 22 has been beneficial for them. The ruling brings an end to the legal back-and-forth surrounding gig worker classification in the state. It also overturns a previous ruling by a superior court judge who deemed Prop 22 unconstitutional, citing limitations on the state legislature’s authority.
Proposition 22 was introduced to counter Assembly Bill 5, a state law that would have required these companies to classify gig workers as employees, granting them various benefits and protections. The app-based companies spent over $200 million on advertising campaigns to convince drivers and voters that Prop 22 was in their best interest. Their business models heavily rely on gig workers using their own vehicles, allowing the companies to keep capital expenditures low and scale their operations.
While Prop 22 aimed to strike a balance between providing some benefits to workers while keeping them as contractors, critics argue that it falls short of ensuring a fair wage. Although app-based drivers are eligible to earn 120% of the state minimum wage for hours worked, this minimum wage only applies when drivers are actively engaged in a gig and does not account for the time spent waiting for a job. Critics argue that this fails to account for work-related expenses such as car maintenance, gas, and insurance.
The Supreme Court’s ruling has sparked concerns among labor rights activists, who argue that gig workers deserve more protections and benefits. They believe that drivers should have access to a minimum wage, job security, unemployment protections, and health and safety measures. Critics also point out that the earnings guarantees provided by Prop 22 can be seen as a way for companies to keep driver fares as low as legally required, using opaque algorithms to determine pay.
Furthermore, other benefits such as accident insurance, disability payments, and death benefits are only available to workers who are actively on the job when they get injured. If a driver is waiting for a gig with the app turned on but is not actively driving a passenger or making a delivery, they would not be eligible for these benefits.
The fight over gig worker rights is not limited to California. Uber and Lyft recently agreed to a settlement in Massachusetts, adopting a $32.50 hourly minimum pay standard for drivers to resolve a lawsuit filed by the state’s attorney general. In New York City, delivery workers are entitled to $19.56 per hour for time spent on the app, not just during active deliveries. App-based companies argue that higher wage mandates would negatively impact consumers, as the costs would be passed on to them.
The Supreme Court’s ruling on Prop 22 has far-reaching implications beyond California. It sets a precedent that may embolden app-based companies to implement similar measures in other states. Gig workers and labor rights activists continue to push for better protections and benefits across the country. The battle between gig companies and workers’ rights advocates is ongoing, with recent victories in Massachusetts and Minnesota, where drivers won higher pay standards.
In conclusion, the California Supreme Court’s ruling solidifies Proposition 22 as a law, allowing app-based companies to classify gig workers as independent contractors. While it is a win for companies like Uber and Lyft, critics argue that the benefits provided by Prop 22 fall short of ensuring fair wages and adequate protections for workers. The battle over gig worker rights extends beyond California, with recent developments in Massachusetts and New York City highlighting the ongoing struggle between app-based companies and labor rights activists.