Gig Worker Lawyer

California’s Assembly Bill 5, which became law January 1, 2020, mandates that a worker is considered an employee and not an independent contractor unless the hiring entity satisfies the three following conditions under the “ABC test”:

• The worker is free from the control and direction of the hiring entity in connection with the performance of the work;
• The worker performs work that is outside the usual course of the hiring entity’s business; and
• The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Under the ABC test, the prevailing view is that drivers for app-based transportation (rideshare) and delivery platforms such as Lyft, Uber, DoorDash, and Instacart should be treated as employees under the law rather than independent contractors. California wage and hour, workplace safety, and retaliation laws protect employees, but they do not protect independent contractors. Hiring entities must make withholdings from an employee’s earnings and pay taxes on those earnings, but not for independent contractors. California uses different tests to determine employment status than under federal law. Thus, a California worker may be considered an employee and thus entitled to protections under California law even if the worker would not be considered an employee under federal law.

Based on the public’s perception that app-based drivers prefer to work as independent contractors, not employees, on November 3, 2020, California voters approved Initiative Measure Proposition 22. Proposition 22, which was funded in part by app-based companies with a vested interest in ensuring the initiative’s passage, exempts drivers for app-based transportation (rideshare) and delivery platforms from the mandates of Assembly Bill 5 and allows these drivers to continue working as independent contractors, while also providing drivers new benefits and protections not available under pre-existing law.

Proposition 22 adds Sections 7448 through 7467 to the California Business and Professions Code, which is known as the Protect App-Based Drivers and Services Act. Proposition 22 also amends Section 17037 of the Revenue and Taxation Code. Proposition 22 classifies drivers for app-based transportation (rideshare) and delivery companies that deliver food, groceries, and other goods as “independent contractors,” not “employees,” unless the company: (i) unilaterally sets drivers’ hours, (ii) requires drivers to be logged into the company’s online-enabled application or platform for a minimum number of hours; (iii) requires acceptance of specific ride or delivery requests, or (iv) restricts drivers working for other companies.

Independent contractors are not covered by various state employment laws—including minimum wage, overtime, unemployment insurance, and workers’ compensation.

However, under Proposition 22, certain alternative wage and healthcare standards apply to app-based independent-contractor drivers, though they are inferior to the protections applicable to individuals deemed to be employees. Such drivers are entitled to minimum compensation levels—a minimum earnings guarantee (tied to 120 percent of minimum wage with no maximum, but only for the time from when the driver accepts a request to when the driver completes a request), healthcare subsidies (consistent with the average contributions required under the Affordable Care Act), per-mile compensation for vehicle expenses, accident automobile insurance of least one million dollars ($1,000,000) per occurrence to compensate third parties for injuries or losses proximately caused by the operation of an automobile by an app-based driver; occupational accident insurance to cover medical expenses and lost income resulting from on-the-job injuries; and protection against discrimination and sexual harassment.

Proposition 22 also restricts local regulation of app-based drivers (enabling drivers to travel across jurisdictional boundaries without complying with inconsistent and contradictory local regulations) and criminalizes impersonation of drivers. In addition, Proposition 22 requires drivers to undergo background checks and driver safety training and limits the hours a driver may be logged into the company’s online-enabled application or platform.

Thus, while Proposition 22 has enabled app-based drivers to retain the flexibility characteristic of gig work some app-based drivers treasure and does provide some protections not usually available to independent contractors, it also robs them of employee benefits such as wage and hour protections and unemployment insurance. For many workers who have struggled in vain to obtain decent jobs with livable wages and benefits and by default have ended up participating in the on-demand economy, Proposition 22 has provided little in the way of improvement in their lives. Dangerous conditions and low pay remain the norm.

Three individuals who had worked as drivers for app-based companies, a regular consumer of app-based driver services, as well as the Service Employees International Union California State Council, and the Service Employees International Union, petitioned for a writ of mandate declaring the Protect App-Based Drivers and Services Act (Proposition 22) unconstitutional. On August 20, 2021, Alameda Superior Court Judge Frank Roesch found the entirety of Proposition 22 unenforceable.

Article XIV, Section 4 of the California Constitution vests the California Legislature with complete and absolute power to create and enforce the complete workers’ compensation system of the State of California. Proposition 22 altered the employment status of certain workers who would otherwise be classified as employees (e.g. app-based drivers) under the ABC test. Consequently, these workers, labeled independent contractors, were exempted from participation in California’s workers’ compensation system. The petitioners argued that since Proposition 22 infringed on the Legislature’s complete and absolute power to create a complete system of workers’ compensation by restricting eligibility, Proposition 22 was unconstitutional.

The Court agreed that Proposition 22 limited a power vested in the state legislature by the California Constitution to determine which workers in the future are covered by the state workers’ compensation system and which workers are not.

Hector Castellanos, et al. v. State of California, et al., Case Number RG21088725.

Note: this is unlikely to be the last word on the subject. An appeal will undoubtedly follow, so stay tuned for the fate of Proposition 22 and the Protect App-Based Drivers and Services Act.

If you are an app-based driver and believe the company is violating your rights by not complying with the requirements of Proposition 22, or if you believe your employer or former employer has otherwise violated your rights, call the experienced employment law attorneys at Kokozian Law Firm, APC or Contact Us via our online form.