How Rideshare Companies Are Taking Advantage of Their “Independent Contractors”
| Read Time: 2 minutes | Wage & Hour

On November 4, 2021—after Uber, Lyft, DoorDash, Instacart and Postmates spent over $200 million dollars in potentially misleading advertising—California voters passed Proposition 22, a voter initiative that provided a legal exemption to California’s laws on what constitutes an employer-employee relationship for “app-based rideshare and delivery drivers.” These companies put Prop. 22 on the ballot to expressly escape a California Court of Appeal ruling that would have mandated they treat all drivers as employees.

Supported by the so-called “gig economy” companies, Prop. 22 provides that ride-share and delivery service drivers would still be classified as independent contractors depriving them of California’s robust legal productions for employees. In exchange, they would receive certain guaranteed minimum earnings (but only for time actually driving) and a small health care “stipend”—but would remain ineligible for many benefits that employees take for granted such as, worker’s compensation coverage for on-the-job injuries, unemployment insurance payments, no overtime pay, no sick leave, no workplace discrimination protections, and no right to collectively bargain.

Now that these companies have created a legal loophole to prevent their employees from even being recognized as employees—and the protections that come with that classification—other companies, such as Vons, Pavilions, and Albertsons, are moving to terminate existing employees and replace them with “independent contractors” sourced through DoorDash and arguably subject to Prop. 22. Thus, we can expect to see a move towards a Prop 22 focused staffing model, where employees are terminated in favor of independent contractors where there is a delivery model component to their work.

The proposition backers, Uber, Lyft, DoorDash, Instacart and Postmates, and others, are also beginning the process to get the Proposition passed in other states by ballot measure or other means. To add insult to injury, despite running a campaign that threatened doomsday scenarios of rising prices for consumers, Uber and Lyft are raising prices for California customers to pay for these additional benefits anyway.

What Does Prop. 22 Change About California Independent Contractor Law?

While things may look bleak for “ride-share drivers,” most other employees remain covered under California’s “ABC” test for employment. The ABC test is a generous, employee-friendly test that requires that workers be classified as employees unless the worker is free from the employer’s control in doing their work, they perform work outside the scope of the employer’s business, and the worker is in an independently established trade or profession. This test still applies to the vast majority of Californian’s despite the passage of Prop. 22.

Even under Prop. 22, workers are not automatically exempted from the law, the company still needs to show they qualified under Prop. 22 with a four-factor test regarding the relationship between the company and the worker, including that the company does not prevent the driver from working for other companies and does not regulate the times and hours a worker must be logged into the platform.

Contact an Experienced Employment Attorney Today

If you think that you are being misclassified as an independent contractor due to Proposition 22 or any other reason, we provide free consultations for all clients facing issues with misclassification. Contact our experienced employment lawyers today.

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Julian Burns King graduated with honors from Harvard Law School and founded King & Siegel in 2018. As head of the Firm’s discrimination and harassment practice areas, she champions the rights of working parents and victims of workplace discrimination and harassment. She has been recognized as a “Rising Star” by Super Lawyers annually since 2018 and has recovered tens of millions of dollars on behalf of her clients.

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