In the lead up to the historic November 3, 2020 election, Uber, Lyft and other gig economy companies poured more than $200,000,000 into the campaign to pass Proposition 22 in California. The opposition labor and union groups spent nearly $20,000,000 fighting Proposition 22. Proposition 22 passed by a margin of 58% vs. 42%. Proposition 22 exempts firms like Uber and Lyft from classifying their drivers as employees as was previously required by Assembly Bill 5 (“AB-5”).

AB-5 took the three-part test to determine whether a gig worker was an independent contractor and put it into law. AB-5 was specifically passed to protect workers’ rights, but Uber and Lyft refused to follow that law and instead chose to litigate AB-5’s applicability and lobby for the passage of Proposition 22. Proposition 22 considers App-based drivers to be independent contractors and not employees, although it did also enact labor and wage policies specific to App-based drivers.

Proponents of Proposition 22 believe the law protects “drivers’ preference to be independent contractors with the flexibility to work when, where and how long they want”. Opponents of Proposition 22 believe it is simply an end run around the protections afforded to workers under AB-5, which was intended to make sure gig workers are not exploited by companies and left without basic rights such as workers compensation and unemployment insurance.

The possible implications of Proposition 22 reach far beyond California and the ridesharing industry. Stay tuned!