While some of the 2020 election is still undecided, California voters were fairly definitive in their support of Proposition 22, which will now allow app-based rideshare and delivery companies to hire drivers as independent contractors if various conditions are met.

A key part of Prop 22 provides workers with minimum compensation levels, health insurance subsidies to qualifying drivers, medical costs for on-the-job injuries and prohibits drivers from working more than 12 hours in a 24-hour period for a single company. It also requires companies to develop sexual harassment policies, conduct criminal background checks, and require safety training for drivers.

Since the advent of ride-sharing apps, the gig economy and the State of California have grappled over how workers who provide rideshare and delivery services should be classified. This disagreement started soon after these services became popular but came to a head with the passage of Assembly Bill 5 (“AB 5”) in 2019. Effective January 1, 2020, AB 5 adopted the stringent “ABC Test” for determining whether individuals should be classified as independent contractors or employees. AB 5 included a number of narrow exemptions, none of which were applicable to these drivers. This year, Governor Newsom signed Assembly Bill 2257 (AB 2257), which recasts, clarifies, and expands exemptions to AB 5. However, AB 2257, like AB 5, did not include any exemption applicable to ride-sharing companies.

With the passage of Proposition 22, app-based workers may be classified as independent contractors while also being provided benefits which typically would evidence an employee/employer relationship.

While the law is limited to app-based rideshare and delivery companies, the passage of Proposition 22 may allow for additional companies to pursue similar models. Or, potentially, other industries will seek to take their arguments for independent contractor classification to the voters. Proposition 22’s passage will also impact similar battles going on with rideshare and delivery companies in other states as well as states that planned to adopt legislation to follow California’s lead on the classification of drivers.

The legislature can only amend the new law if the changes are consistent with the Proposition’s purpose and if seven-eighths of lawmakers favor the amendment.

Jackson Lewis will continue to monitor worker classification legislation and regulations. If you have questions about worker classification, contact a Jackson Lewis attorney to discuss.

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Photo of Adam Y. Siegel Adam Y. Siegel

Adam Y. Siegel is a principal in the Los Angeles, California, office of Jackson Lewis P.C. His practice focuses on employment litigation, as well as on advising employers regarding daily workplace issues.

Adam has litigated cases in both state and federal court. Adam’s…

Adam Y. Siegel is a principal in the Los Angeles, California, office of Jackson Lewis P.C. His practice focuses on employment litigation, as well as on advising employers regarding daily workplace issues.

Adam has litigated cases in both state and federal court. Adam’s litigation experience includes handling a wide range of employment-related issues including discrimination, harassment, wrongful termination, retaliation, whistleblower claims, and wage and hour claims. Adam has litigated numerous wage and hour class and multi-plaintiff actions and has trial experience. Adam has also conducted and prepared workplace Investigation Reports. He conducts training seminars and speaks on a multitude of employment law topics.

Photo of Benjamin A. Tulis Benjamin A. Tulis

Benjamin Tulis is a principal in the Los Angeles, California, office of Jackson Lewis P.C. His practice focuses on advice and counsel within the labor and employment law sector. Ben is a member of the California Advice and Counsel resource group.

Ben counsels…

Benjamin Tulis is a principal in the Los Angeles, California, office of Jackson Lewis P.C. His practice focuses on advice and counsel within the labor and employment law sector. Ben is a member of the California Advice and Counsel resource group.

Ben counsels employers on a host of employment issues, including wage and hour laws, leaves of absence, employment-related agreements, incentive plans, independent contractor classifications, exempt/non-exempt classifications, company policies, reductions in force, workplace investigations, employee discipline, litigation avoidance and helping employers address legal developments on the fly as they arise. Ben assists employers with a wide variety of employment-related agreements, including but not limited to employment agreements, confidentiality agreements, commission agreements, incentive plans, contractor agreements, severance agreements, arbitration agreements and various other agreements with employees and third parties. Ben helps employers develop incentive arrangements, including commission arrangements with industry-specific compliance issues.