Workers’ Rights in a Post-Proposition 22 World

By: Andrew Morin
Associate Editor, Vol. 26

           This past election, California voters decided on an issue that may have far-ranging consequences for the future of employment and worker’s rights across the country. Proposition 22, approved by 56% of California voters, excludes gig companies such as Uber, Lyft, DoorDash, and others from a law that would have classified their workers as “employees” instead of “independent contractors.”[i] The approval of Prop 22 reverted these gig workers back to independent contractor classification, thereby eliminating may of the benefits that come with “employee” classification. Prop 22 is a serious blow not only to gig workers, but to the broader multiracial movement fighting for workers’ rights. 

Background

            At the beginning of 2020, California’s AB5 went into effect. This law takes private-sector workers misclassified as “independent contractors” and re-classifies them as “employees.”  When workers are classified as independent contractors, companies are not required to provide them minimum wage, overtime pay, paid sick time, and other benefits.[ii] Further, protections such as anti-discrimination laws and anti-sexual harassment laws only cover “employees” and do not extend to independent contractors.[iii] This misclassification of workers as independent contractors “is a serious and persistent problem nationwide.”[iv] AB5 sought to correct this. However, its broad application faced serious challenges from gig companies from the start. Companies such as Uber, Lyft, DoorDash, and Instacart argued that they do not actually employ people who use the app, they simply offer a platform for people to provide a service on.

            Once AB5 was enacted, gig companies immediately went on the attack. In defiance of the law, Uber and Lyft refused to reclassify their drivers as employees, a decision that led California to sue the two companies.[v] After courts ordered Uber and Lyft to reclassify their workers, the companies threatened to shut down operations in the state.[vi] At the same time, Uber, Lyft, and other companies launched a massive $200 million campaign in support of Prop 22, the most expensive ballot initiative in US history.[vii]

           In the weeks leading up to the election, Prop 22 became omnipresent in California. TV, digital ads, and billboards flooded the media voicing support for Prop 22. The companies utilized in-app notifications for both its users and workers. Uber and Lyft required customers to agree to support Prop 22 before being able to hail a ride.[viii] DoorDash had its workers place all food in bags brandishing large text that said “Yes on Prop 22.”[ix] The strategy worked – 56% of voters in the supposedly progressive firebrand of a state voted to pass the proposition.

Proposition 22 and its Effects

            Prop 22 was cynically pushed as pro-worker by its proponents. The law offers a “guaranteed wage floor” of 120% of minimum wage and 30 cents per mile for drivers.[x] The proposition requires gig companies to create anti-discrimination and sexual harassment policies and also provides health care subsidies and accident insurance.[xi] Given the threats that companies voiced regarding potential ramifications of reclassifying workers, many saw a vote for Prop 22 as maintaining the status quo while providing gig workers with some benefits that were not already offered.

           While Prop 22 does provide benefits that were not present previously, these benefits fall short of the benefits and worker protections that would have accompanied reclassification. Drivers are only paid on the basis of the wage floor during active drive times.[xii] Based on a study by UC Berkeley Labor Center, the 120% of minimum wage drivers, or $15.60 an hour, goes down to $5.64 an hour when accounting for the wait time in between rides or deliveries.[xiii] This is far less than California’s $12.00 an hour minimum wage and less than the federal minimum wage of $7.25 an hour. The other benefits provided, such as the health care stipend, pale in comparison to the benefits and protections provided to workers classified as employees. This is especially true given the fact that most of these benefits are only provided to drivers who work more than “25 engaged hours,” which “the vast majority of drivers” do not reach.[xiv]

            Prop 22 will be especially harmful to people of color. As with working class jobs and the service industry generally, people of color are disproportionately represented in the gig economy. A recent study focusing on the gig economy in San Francisco found that roughly 78% of ride-hail and delivery workers are people of color, while 56% of workers are immigrants.[xv] Prop 22 will actively harm workers of color.[xvi] The law exempts gig companies from anti-discrimination employment laws, weakening protections for immigrant workers and offering no protection against discrimination on the basis of “traits historically associated with race.”[xvii] The law contains virtually no enforcement mechanism for drivers who claim discrimination.[xviii] This is especially troubling considering these companies require their workers to sign forced arbitration clauses.[xix] Further, Prop 22 exempts gig workers from workplace safety laws. These protections are vital especially during the COVID-19 pandemic: the demand for both gig jobs and the services these platforms provide are growing.[xx]

The Future of Workers’ Rights

            The impact of Prop 22 will not be limited to California. Uber and Lyft have already stated plans to replicate Prop 22 in other states.[xxi] While President Elect-Biden’s platform states that he wants to “ensure workers in the ‘gig economy’ and beyond receive the legal benefits and protections they deserve,” members of his transition team, as well as the previous Obama administration, have multiple, direct ties to gig companies.[xxii] Thus, Prop 22 may be harbinger of the future erosion of workers’ rights. Working class individuals properly classified as employees already face an uphill battle when it comes to fighting for increased wages, healthcare, the right to unionize, and other protections. This fight would become even more difficult if policies similar to Prop 22 become dominant in this country. Employers could side-step the workers’ rights advocacy by simply classifying their workers as independent contractors. This would erase many of the gains made by the labor movement and would be disastrous to the lives of millions of workers.

            While the passing of Prop 22 is ominous for the labor movement and the future dignity of workers, the fight is not over. Grassroots movements such as Gig Workers Rising, as well as traditional labor movements, are attempting to organize gig workers around improved wages and worker protections. If President-Elect Biden stays true to his word, his administration could work to reclassify gig workers at the federal level and mitigate the impact of Prop 22 (though a Republican-controlled Senate could make this task difficult). Further, legal scholars have been attempting to determine other means of ensuring gig worker rights. Notably, Sanjukta Paul, assistant professor at Wayne State University Law School, argues that changes in antitrust law, rather than labor or employment law, could be used to aid gig workers classified as independent contractors.[xxiii]

            With rising income and wealth inequality, we should be enacting policies promoting workers’ rights rather than weakening them. This includes advocating for increased wages and economic benefits alongside antiharassment, antidiscrimination, and antiracist policies. We should not rely on the benevolence of corporations and employers. Instead, we should be focusing on enacting pro-worker legislation. Though it may be an uphill fight, Prop 22 and similar policies need to be defeated and overcome.

[i] See Josh Eidelson, Election Day Gave Uber and Lyft a Whole New Road Map, Bloomberg Businessweek (Nov. 8, 2020), https://www.bloomberg.com/news/articles/2020-11-08/prop-22-gives-uber-and-lyft-a-new-model-for-gig-economy-workers.

[ii] See id.

[iii] See id.

[iv] Celine McNicholas & Margaret Poydock, How California’s AB5 Protects Workers from Misclassification, Economic Policy Institute (Nov. 14, 2019), https://www.epi.org/publication/how-californias-ab5-protects-workers-from-misclassification/.

[v] See Kate Conger, Uber and Lyft Get Reprieve After Threatening to Shut Down, N.Y. Times (Aug. 20, 2020), https://www.nytimes.com/2020/08/20/technology/uber-lyft-california-shutdown.html.

[vi] See id.

[vii] See Hussain et al. , How Uber and Lyft Persuaded California to Vote Their Way, L.A. Times (Nov. 13, 2020), https://www.latimes.com/business/technology/story/2020-11-13/how-uber-lyft-doordash-won-proposition-22.

[viii] See id.

[ix] See id.

[x] Sam Harnett, Prop. 22 Explained: Why Gig Companies Are Spending Huge Money on an Unprecedented Measure, KQED (Nov. 4, 2020),https://www.kqed.org/news/11843123/prop-22-explained-why-gig-companies-are-spending-huge-money-on-an-unprecedented-measure#money.

[xi] See id.

[xii] Ken Jacobs & Michael Reich, The Uber/Lyft Ballot Initiative Guarantees only $5.64 an Hour, U.C. Berkeley Labor Center (Oct. 31, 2019), https://laborcenter.berkeley.edu/the-uber-lyft-ballot-initiative-guarantees-only-5-64-an-hour-2/.

[xiii] Id.

[xiv] Id.

[xv] Chris Benner, On-Demand and On-the-Edge: Ride Hailing and Delivery Workers in San Francisco, U.C. Santa Cruz Institute for Social Transformation 1, 2 (May 5, 2020, https://transform.ucsc.edu/wp-content/uploads/2020/05/OnDemandOntheEdge_ExecSum.pdf.

[xvi] Harnett, supra at note 10.

[xvii] Prop 22 Harms People of Color First and Worst, National Employment Law Project (Oct. 13, 2020), https://www.nelp.org/publication/prop-22-harms-people-color-first-worst/#_edn5.

[xviii] See id.

[xix] See Charlotte Garden, Disrupting Work Law: Arbitration in the Gig Economy, 2017 U. Chi Legal F. 205 (2018).

[xx] Prop 22 Harms People of Color First and Worst, National Employment Law Project (Oct. 13, 2020), https://www.nelp.org/publication/prop-22-harms-people-color-first-worst/#_edn5.

[xxi] See Eidelson, supra note 1.

[xxii] See id.

[xxiii] See Julia Angwin, The Antitrust Case for Gig Worker Rights, The Markup: Hello World (Nov. 7, 2020), https://www.getrevue.co/profile/themarkup/issues/the-antitrust-case-for-gig-worker-rights-289982 (interviewing Assistant Professor Sanjukta Paul about her research on anti-trust law and the potential legal protections it may provide gig workers).