Still undecided about California’s gig economy law? Five things to know about Prop. 22
Should gig workers for companies such as Uber, Lyft, DoorDash and Instacart be paid as independent contractors or employees of the tech giants?
For weeks, Californians have been bombarded with advertisements for Proposition 22, which would allow gig economy drivers to continue working as independent contractors while providing some of the benefits given to employees.
The initiative has become the most expensive ballot measure in the state’s history. Companies such as Uber and Lyft have spent more than $180 million for the measure, while labor unions have spent more than $10 million fighting against them.
Here is what you need to know about the measure:
How gig companies got to this point
Gig companies such as Uber and Lyft classify their drivers as independent contractors, a status that means they don’t qualify for benefits such as minimum wage and overtime.
In 2018, the California Supreme Court handed down a decision that restricted when companies can hire independent contractors instead of employees entitled to benefits. Gov. Gavin Newsom then signed Assembly Bill 5, the state law that codified the court ruling and directed companies to provide benefits to more workers.
Uber, Lyft and DoorDash filed a ballot measure seeking exemptions for their workers. That measure became Prop. 22.
Proponents of the initiative argue Prop. 22 will save hundreds of thousands of jobs as well as services such as Uber and DoorDash.
But opponents say Prop. 22, if passed, will create a class of workers that those companies can continue to exploit.
Drivers’ wages and benefits
Prop. 22 promises some new perks for gig drivers, but they will miss out on some of the state-mandated benefits employees enjoy.
If it passes, Prop. 22 says drivers will earn at least 120% of minimum wage for the time they spend picking up and driving passengers, plus 30 cents a mile. Drivers will also get occupational accident insurance, and some of them will receive payments toward their health insurance.
A Lyft-funded study noted under Prop. 22, drivers will be paid anywhere from $25.61 to $27.58 an hour on average. The study came to the conclusion using the data of Uber and Lyft drivers’ earnings in Seattle.
“What’s relevant is how much they’re going to earn,” said the study’s author, Christopher Thornberg of the UC Riverside School of Business Center for Economic Forecasting and Development.
But opponents of the initiative note Prop. 22 doesn’t pay drivers for the time they spend waiting to give a ride. That time accounts for a quarter to more than a third of the drivers’ working time, according to studies.
Opponents also argue many full-time drivers buy a car just to drive for Uber and Lyft. For them, 30 cents a mile doesn’t cover the full ownership costs such as depreciation, insurance, license and taxes, they say. Altogether, some drivers may not make the minimum wage for the hours they work, opponents argue.
Finally, opponents note of what Prop. 22 won’t provide: Overtime, workers’ compensation, paid sick days and unemployment insurance. Some drivers have been receiving unemployment insurance, but mostly under a program created earlier this year by a federal stimulus law. That program will expire by the end of the year.
Do drivers want Prop. 22?
Surveys from a blog The Rideshare Guy and driver polls commissioned by Uber and Lyft show, yes, a majority of drivers want to be independent contractors and support Prop. 22.
“It’s pretty clear from our survey and my conversations with thousands of drivers that despite all of Uber’s faults, they are in favor of Prop. 22 and remaining independent contractors,” said Harry Campbell, the founder and CEO of The Rideshare Guy blog.
But critics of Prop. 22 say those polls have significant flaws.
“The company-paid surveys give the drivers a false choice: Either you are going to have zero flexibility or 100% flexibility, which do you want?” UC Berkeley economics professor Michael Reich said. “In fact, the companies will still need to offer drivers considerable scheduling flexibility. But the question is not phrased that way, so it’s pushing the drivers to identify a choice they will not need to make.”
Those polls often lump in full-time and part-time drivers. Full-time drivers may have different thoughts about Prop. 22, said Carlos Ramos, a leader organizer at Gig Workers Rising, which has been advocating against Prop. 22.
“Companies know the people who power their business are full-time drivers who deserve those benefits,” he said.
How will users of Uber, Lyft and other apps be affected?
If Prop. 22 fails, companies will have to spend more of their money to provide benefits for their employees. Neither side disputes that in that scenario, you will have to pay more to get an Uber ride or food delivered through DoorDash.
The question is how much.
Gig companies say prices of getting a ride can increase by 25% to more than 100% in some parts of the state, with more rural areas burdened with a steeper fare hike.
But Reich came to a different conclusion: Fare increases can be limited to 5% to 10%.
He argued the companies can absorb a lot of those costs by using drivers more efficiently, and reducing how much they take from their drivers.
Can the law be changed again?
Prop. 22 gives the Legislature an authority to amend the initiative, albeit only with a 7/8th of the vote. The amendment should also be “consistent with, and furthers the purpose of” Prop. 22, according to the initiative’s language.
“It’s a very onerous provision,” said Gina Miller, a partner and an employment lawyer at Snell & Wilmer representing employers. “When are you ever going to get 87.5%?”
Still, even if Prop. 22 passes, a battle over gig workers and independent contractors may not end.
Drivers, for instance, may sue gig companies for failing to meet earnings guarantee or provide sexual harassment training, Miller said.
Prop. 22’s passage may also prompt other industries affected by AB 5 to seek their own ballot measures for an exemption, she said. “Over the next 10, 20 years, AB5 will just be chipped away and chipped away that there will be so many exceptions.”
This story was originally published October 16, 2020 at 5:00 AM with the headline "Still undecided about California’s gig economy law? Five things to know about Prop. 22."
