California's Proposition 22 is a state ballot measure that would exempt gig companies from AB5, a landmark labor law passed in 2019 that extended employee protections to gig workers. In other words, Prop 22 would allow these companies not to treat gig workers like employees.
The official name of the ballot measure is the “Protect App-Based Drivers and Services Act”. The measure, if passed by the majority of voters on 3 November, would apply to app-based drivers, including those who work for Uber, Lyft, Instacart and DoorDash.
California is the birthplace of the gig economy, and how it is regulated in its home state may have effects on how regulation plays out in the rest of the country, and the world.
The companies behind Prop 22 have indeed made billions on the contractor-based business model. When Lyft went public in 2019, it was valued at $22bn and had 1.9 million drivers working through its app. Uber was valued at $82bn ahead of its initial public offering in May 2019 and had 3.9 million drivers. The businesses have spent more than $184m on campaigns promoting Proposition 22. Tactics used to promote Proposition 22 have been aggressive and persistent: Uber and Lyft both sent out a number of emails and push notifications within their apps encouraging riders to vote yes. Instacart has encouraged workers to advertise the ballot measure with stickers.
Positioning gig workers as permanent contractors would pose a major blow to workers’ rights. Drivers and labor groups oppose Prop 22, saying it allows companies to sidestep their obligations to provide benefits and standard minimum wages to their workers. Many drivers say they have created a lot of the value for these companies but have seen very little of the profit. “Uber is paying drivers poverty wages and continues to slash wages while executives make millions,” one driver told the Guardian.
The Proposition 22 coalition estimated workers would make $25-27 per hour. Another study from Univeristy of California, Berkeley, said earnings could still be well below the minimum wage, at $5.64 per hour. California’s minimum wage will be $15.60 in 2021.
The official “No On Prop 22 Coalition” is made up of four driver groups: Gig Workers Rising, We Drive Progress, Mobile Workers United and Rideshare Drivers United. The Service Employees International Union also joined the fight against Prop 22.Cumulatively these groups represent more than 55,000 workers in California. The Los Angeles Times, the New York Times, and a number of California papers including the Sacramento Bee, the Fresno Bee, the Modesto Bee, Merced Sun Star, and San Luis Obispo Tribune have called on voters to reject Prop 22. Kamala Harris and Joe Biden have spoken also against it, while Bernie Sanders has also condemned the ballot measure, tweeting: “I’m opposed to Prop 22 because people working full time deserve decent wages and good benefits.”
If Proposition 22 passes, workers will retain their status as independent contractors. They will not be provided health insurance through Lyft or Uber but will get stipends towards insurance. It will also be difficult to change or overturn in the future, because that would require a 7/8 supermajority – difficult to attain in the California legislature.