September 8, 2020
September 8, 2020: Uber and Lift Banking on Prop. 22
This November 3rd, California voters will vote on Proposition 22, also known as the “App-Based Drivers as Contractors and Labor Policies Initiative.” App-based drivers are individuals who provide transportation to the public through rideshare programs typically offered online or through “apps” by such companies as Uber and Lyft. Because of Assembly Bill 5 (AB-5), which went into effect on January 1, 2020, app-based drivers are presumed to be employees of the companies for whom they provide rideshare services. Proposition 22 would eliminate that presumption as it applies to app-based drivers, so as to allow them to work for rideshare companies as independent contractors.
In August, Uber, Lyft and DoorDash each invested $30 million toward this ballot initiative. (See Megan Rose Dickey, https://techcrunch.com/2019/10/29/this-is-the-gig-worker-ballot-initiative-uber-lyft-and-doordash-are-backing/10/29/19.) Following the passage of AB-5, Uber Chief Legal Officer Tony West said Uber would be willing to put additional money toward the initiative, and plans to keep defending its worker model. (Ibid.) Rideshare companies support the measure because it affords drivers the flexibility to decide when to drive and provide services, and because it lessens the company’s costs of doing business. Opponents argue that app-based drivers are deserving of labor protections typically afforded employees in the workplace, such as minimum wage laws, sick leave, and unemployment and workers’ compensation benefits, which do not apply to independent contractors.
If Proposition 22 passes this November, it will effectively overturn the rigid ABC test articulated by the California Supreme Court in Dynamex Operations West Inc. v. Superior Court of Los Angeles (2018) 4 Cal. 5th 903, as that decision applies to app-based drivers. If Proposition 22 is defeated, it is expected that rideshare companies will likely have to change their business models in order to avoid lawsuits alleging Labor Code violations and employee misclassification under Dynamex.
At Anderson, McPharlin & Conners, we pay close attention to ongoing developments in wage and hours laws as they pertain to various industries. If faced with the threat of litigation alleging employee-misclassification or have questions regarding employment laws, please contact our Employment Law team.