Prop. 22’s Slippery Slope

March 8, 2021

Thanks in large part to the strenuous efforts ($200 million of efforts) of Uber, Lyft, InstaCart, and DoorDash, California passed Proposition 22 last November. This proposition allowed “app-based transportation and delivery drivers” to be defined as independent contractors. It also allowed for the “adopt[ion] [of] labor and wage policies specific to app-based drivers and companies.” While Prop. 22 was propelled by ride-sharing companies, the effects have been spreading to other industries. For example, grocery delivery workers have been fired and subsequently replaced by DoorDash workers at Albertsons in California. The supermarket chain made this move in hopes of improving operating efficiency: but at what cost to the job security of employees?

Companies in other industries may soon use Prop. 22 to increase efficiency at the cost of employees’ job security and employment protections. It is not difficult to see how app-based transportation and delivery drivers play roles in a plethora of industries. Ride-sharing was clearly just the start. The second part of Prop. 22 that allows for the adoption of labor and wage policies specific to app-based drivers and companies suggests the creation of a new class of worker. The idea seems to be to create greater protection for app-based independent contractors without giving them statutory employee status. This gives the employer greater control and flexibility pertaining benefits the employer must provide the employee.

It appears that a carveout (Prop. 22) framed as narrowly applying to the ride-sharing industry has created an “employee” state of limbo that is currently permeating other industries.

But labor unions also have become involved and seem to be helping app-based independent contractors gain traction for a seat at the bargaining table with employers. There seems to be, at least in theory, a compromise that has occurred. Uber, Lyft and similar companies have gotten to keep drivers as independent contractors. In return, drivers have been given certain benefits such as an “earnings guarantee” that doesn’t count the time or gas burned waiting for another trip.

But reports indicate that gig worker compensation has decreased and that working conditions remain sub-par. If these conditions are indeed a result of Prop. 22, that spells danger for gig workers, as Prop. 22 appears to be here to stay. Prop 22 “insulates itself” by preempting local laws and requiring that changes by the state legislature “comport with [Prop. 22’s] intent” and pass with a seven-eighths supermajority.

The key victory for Uber and Lyft at the expense of gig workers with Prop. 22 was that most of the benefits provided to drivers today are because the company chooses to provide those benefits. Employee status entails a package of guaranteed benefits. Gig worker benefits, and thus, protection, hinges on the whims of the companies right now. The real danger is that benefits will ebb and flow as desirable (or undesirable) for Uber and Lyft and companies in other industries that utilize Prop. 22, creating uncertainty and unpredictability and potentially a lack of protection for employees.

It appears that a carveout (Prop. 22) framed as narrowly applying to the ride-sharing industry has created an “employee” state of limbo that is currently permeating other industries. Can labor unions help stem the ill effects of Prop. 22? Will gig companies provide an adequate level of employee protections under Prop. 22? How far-reaching will Prop. 22’s reach be? Has Prop. 22 created a new class of workers? Something that is more than an independent contractor (or more in appearance) yet falls short of employee status?

“The only ones who want independence are the damn app companies themselves. An employee-employer relationship is one of dependence, which is what the drivers are arguing.” A University of California, Berkeley, study revealed that Prop. 22 has led to a minimum wage of only $5.64 per hour. General worker sentiment is that things have remained the same or gotten worse since Prop. 22, with the companies claiming things have gotten better. Well, truth is, things have gotten better—for the companies. The gigs workers are still subject to the whims of their “employer.”

But the challenge to Prop. 22 appears to be far from over. With assistance of a major labor union, a small group of gig worker-drivers are leading a legal challenge to Prop. 22, even after the California Supreme Court threw out the suit. The plaintiffs have refiled the suit in Alameda County Superior Court arguing that Prop. 22 violates the California Constitution “by removing the state Legislature’s ability to grant workers the right to organize and give access to the state workers’ compensation program.” It appears that a large swath of gig workers would vote differently on Prop. 22: hindsight 20/20, so they say? For the time being, Prop. 22 is at an interesting juncture, as its constitutionality is being persistently challenged as it permeates other industries and continues to disrupt traditional employer-employee relationships.

Thomas Nelson Hughes, Jr.

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